| Summary: | This study analyzes the relationship between product diversity and performance of microfinance institutions (MFIs), especially Credit Union (CU) and Badan Usaha Kredit Pedesaan (BUKP), in Yogyakarta Special Province. The number of saving�loan product types and non saving�loan product types of sampled MFI�s is used as the indicators of product diversity. Meanwhile, the number of loan clients (representing the scale of outreach), average loan size (representing the depth of outreach), value of loans disbursed per staff (representing the staff productivity), operational cost per assets ratio (representing the operational efficency), and operational selfsufficiency (representing the self-sufficiency) used as the performance indicators of sampled MFIs. This study utilizes annual pooled cross section data from 16 CUs and 34 BUKPs in Yogyakarta Special Province for the period of 2010�2011. The binary logistic regression method is used to examine whether or not the relationship between product diversity and performance exist in the operation of sampled MFIs. The result of the study indicates that MFI with more various saving�loan product types tends to have a smaller chance to serve a relatively high number of loan clients and big average loan size. In other words, this study indicates a direct negative relationship between the level of product diversity and scale of outreach and also a direct positive relationship between the level of product diversity and depth of outreach. This study also indicates a indirect negative relationship between the level of product diversity and financial performance, especially staff productivity and self-sufficiency.
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