MCDM approaches for performance evaluation: a case of microfinance institutions in Malaysia / Shazarina Shahar, Nur Ainaa Dayana Ishak and Siti Anisah Sheikh Ahmad Kamal Aldakhrouj

Microfinance is becoming more important as a major contributor to establishing new job opportunities and generating money in order to improve the poor's social and economic status and reduce poverty. Various institutions and non-banking government bodies have overseen administering Malaysia's microfinance programme. The most important institutions for this research are Amanah Ikhtiar Malaysia (AIM), Tabung Ekonomi Kumpulan Usaha Niaga (TEKUN), and Agrobank. The aim of this study is to determine the important criteria in measuring the performance of MFIs and calculate the weightage of each criterion by using Analytic Hierarchy Process (AHP) and CRiteria Importance Through Intercriteria Correlation (CRITIC) methods. Further, this paper will evaluate the performance of Microfinance Institutions in Malaysia by integrating CRiteria Importance Through Intercriteria Correlation (CRITIC) and Analytic Hierarchy Process (AHP) methods into Technique for Order Preference by Similarity to Ideal Solution (TOPSIS), VIseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR), Simple Additive Weighting (SAW) and Preference Ranking Organization Method for Enrichment Evaluations (PROMETHEE II). Microfinance institutions in Malaysia must develop sustainability criteria that includes both financial and non-financial criteria to achieve their fundamental goals of assisting society. Thus, we chose nine important criteria which are Loan Disbursement (C1), Operating Self-Sufficiency (C2), Financing Target (C3), Revenue (C4), Repayment Rate (C5), Government Grant (C6), Breadth of Outreach (C7), Depth of Outreach (C8), and Age of MFI (C9). The result shows AIM is the best microfinance institution in Malaysia due to its consistent performance in the method proposed which is by integrating AHP and CRITIC into TOPSIS, VIKOR, SAW and PROMETHEE II.