Non-Financial Performance Measures on Local Culture Basis in Assessing The Health of Microfinance Institutions

Abstract

Objective - Health assessment on microfinance institutions was conducted through non-financial measurements consisted of assessment on general and risk managements. The assessment was commonly used to assess commercial banks. Microfinance institutions, however, are differed to commercial bank in terms of their closeness to the poor. The paper presented the development and analysis of non-financial performance measures using local culture basis that can be applied to properly assess microfinance institutions. Methodology/Technique - Qualitative study with ethnomethodology approach was applied to see cultural activities undertaken. Managers were considered as key informants. Results of qualitative study were analyzed using Fuzzy-Analytic Hierarchy Process method and Weighted Product Model was applied to weight the criteria and sub-criteria as well as the final assessment. Findings - Results showed that local culture activities that could be used to assess general management in microfinance institutions were providing assistance in establishing places of worship, supporting religious activities, supporting the development of facilities and infrastructures in the villages, relief activities of cultural festival, helping in funeral, wedding favors, educational assistance, medical assistance, forming arts groups, and business group. Novelty - This study suggests that non-financial performance measurements can use local culture and facilitate the management of microfinance institutions to perform performance measurement Type of Paper - Empirical Keywords: Non-Financial; Performance Measures; Local Culture; Microfinance Institutions. JEL Classification: G21, G31.