Abstract
Maximizing profitability is an important prerequisite for dealing with rising competition in the microfinance industry and ensuring long term sustainability. While profitability measurement is more commonly based on ratio analysis technique, the current study uses a non-parametric linear programming tool known as Data Envelopment Analysis (DEA) for this purpose. This study makes a contribution to the existing research on the profitability of microfinance providers (MFPs), by investigating the Pakistan-based operations of a set of MFPs. The results of the analysis reveal considerable potential for improvement in the profit efficiency of a number of selected MFPs.
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