Comprehensive Performance Measurement for Microfinance Institutions in Ethiopia

Abstract

This study develops comprehensive performance measurement for microfinance institutions which incorporate both financial and nonfinancial metrics using balanced score card approach (BSC). The BSC framework of the study developed using a total of 20 performance indicators categorized under the 4 BSC perspectives (financial, customer, internal business process and learning and growth). The performance measurement model is developed based on reviewed literatures and after the comprehensive performance measurement descriptive model developed, 10 microfinance experts of national bank of Ethiopia (NBE) and association of Ethiopian microfinance institutions (AEMFI) gives weight for each BSC perspective and for each twenty performance indicators. Furthermore since financial performance are commonly measured using ratios and numbers to measure a comprehensive performance and to make financial and non-financial performance parameters comparable the experts asked to develop a bench mark to convert financial performance parameters in to 5 point Likert scales. Finally the study provide a BSC based performance measurement framework that will give a comprehensive view on the financial and non-financial performance.