Determinants of Operating Expense of Microfinance Institutions:A Study on Select MFIs in Assam

Operating expenses are the largest component of total cost of every Microfinance Institutions (MFI). It has direct impact on the interest rate on microcredit extended by the MFIs. This study examines the trend in operating expenses of seven selected MFIs in Assam, for the period 2009-10 to 2013-14, based on the data collected from 46 NBFC branch offices and 15 branch offices of NGO-MFIs. It finds significant variation in operating expenses of NGO-MFIs and NBFCs. Regression analysis show that the type of MFI, lending model of the MFI, number of active borrowers and number of borrower per staff have significant impacts on the operating expenses of MFIs.