A Framework for Measuring the Performance and Sustainability of Subsidized Development Finance Institutions

Publication Date: 4 Jan 1999
Published by: Microfinance.com

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Analyzing subsidized finance institutions – An exploration of suitable methods

This article is a framework for analyzing the performance and sustainability of subsidized development finance institutions (DFIs).

The article:

• Aims to improve social welfare by measuring performance better;
• Suggests and links questions, and proposes ways to find answers;
• States that:
  • DFIs affect five groups: customers, society, donors, managers and investors;
  • Each group has its own goals and asks its own questions about performance.

The framework presents measures that:

• Inform the questions based on the goals of each group;
• Differ by the opportunity cost of the group, the resources the group entrusts to the DFI and the group’s time frame.

The paper discusses:

• The characteristics of DFIs;
• Analysis, subsidies and subsidized resources;
• Measuring performance from the points of view of the five groups with a stake in a DFI;
• Sustainability.

The paper concludes that:

• No quantitative measure is enough to show sustainability;
• Measuring performance sparks better performance and casts light on bad performance;
• No single indicator completely answers any single question;
• Human work and smarts are needed to analyze indicators to find ways to improve performance.