Better with age? The relationship between longevity and efficiency dynamics of nonprofit microfinance institutions

The objective of this study is to investigate the relationship between longevity and efficiency dynamics of nonprofit microfinance institutions (NMFIs) over the 2005-2014 period. We examined this using a dynamic data envelopment analysis framework that considers the effect of carry-over activities between two consecutive time periods. A robust regression analysis was then used in our second-stage analysis to identify the efficiency drivers. Results showed that new and younger NMFIs perform better than matured ones, so older NMFIs are vulnerable to competition from younger peers and thus, they are more likely to fail. Results also show that NMFIs were not severely affected by the 2008 financial crisis.