Social Performance of Microfinance Institutions in India:Developing an Impact Index Based on Firm Variables

Microfinance Institutions and their programs have been increasingly heralded as instruments of financial inclusion. This paper attempts to create a comprehensible multi-dimensional index on social impact (SII), which will give the stakeholders a good picture of the social performance of the MFIs in the country. The paper uses two methodologies, the HDI based methodology, and the Distance Based Approach, to capture the dimensions of social impact as a single number lying between zero and one, with zero denoting no impact and one denoting complete attainment. The study also makes a comparison between the results of the two dimensions and finds the Distance Based Approach to be more suitable.