Examining mission drift in client targeting among Indian for‐profit microfinance institutions: A multidimensional approach

2021 ◽  
Author(s):  
Sunil Sangwan ◽  
Narayan Chandra Nayak
Keyword(s):  
Multidimensional Approach ◽  
Microfinance Institutions ◽  
Mission Drift ◽  
For Profit

scholarly journals Financing and financial sustainability of microfinance institutions (MFIs): a conceptual view

2016 ◽  
Vol 11 (2) ◽  
pp. 21-32 ◽  
Author(s):  
Innocent Bayai ◽  
Sylvanus Ikhide
Keyword(s):  
Literature Review ◽  
Agency Problems ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Review Of Literature ◽  
Mission Drift ◽  
The Subject ◽  
The Relationship ◽  
Financing Option

Recent evidence shows that MFI financing continues to evolve with an increased inclination towards commercial financing. Taking stock on MFI financing and refocusing on the relationship between financing options and financial sustainability (FS) is unavoidable. The authors consummated a literature review based on complementing the little evidence on the subject with both theoretical and implied evidence from related studies in unpacking the relationship. Though donations are losing grip as a popular MFI financing option, review of literature recommends smart subsidies to spur FS and counter inefficiency, mis-targetting, dependency and distortions. As much as debt addresses agency problems and endorses FS, it has to be kept within limits to curb liquidation and mission drift. Deposit attraction augments FS and outreach, though MFIs must prepare to foot licensing costs, otherwise, mission drift ensues. Equity, though scarce in microfinance, is cheap and additive to FS. The authors suggest that MFIs should consider commercial funding, whilst keeping a check on the downside of each commercial financing option to augment FS and multiply outreach

Cross-Border Funding and Microfinance Mission Drift: Evidence from Sub-Saharan Africa

2016 ◽  
Vol 17 (2) ◽  
pp. 20-40
Author(s):  
Akem Forkusam
Keyword(s):  
Sub Saharan Africa ◽  
Microfinance Institutions ◽  
Public And Private ◽  
Mission Drift ◽  
Cross Border ◽  
The Social ◽  
Sub Saharan ◽  
The Impact ◽  
Different Sources ◽  
Ssa Countries

Sub-Saharan Africa (SSA) has become the top priority for international funders and they are now increasing their cross-border funding to microfinance institutions (MFIs) in the region. This foreign funding is considered an additional source of capital for MFIs in the region who are facing difficulties in meeting the demand of the poor. However, these funds are provided by public and private funders who each have different motives. The paper examines the impact of these different sources of funding on microfinance performance and mission drift in SSA, which is the world’s poorest region. The study utilizes data from 212 MFIs in 30 SSA countries accessed over a three-year period (i.e. 2007, 2009, and 2011). The findings show that cross-border funding does not affect either the social or financial performance of MFIs when time and country effects are accounted for.

scholarly journals Aid Volatility and Social Performance in Microfinance

2016 ◽  
Vol 46 (1) ◽  
pp. 116-140 ◽  
Author(s):  
Bert D’Espallier ◽  
Marek Hudon ◽  
Ariane Szafarz
Keyword(s):  
Interest Rates ◽  
Social Performance ◽  
Microfinance Institutions ◽  
Mission Drift ◽  
Social Mission ◽  
Signaling Device ◽  
Adjustment Variable ◽  
Donor Agencies ◽  
Loan Size ◽  
Policy Prescription

Uncertainty makes objectives harder to reach. This article examines whether uncertainty in subsidies leads to mission drift in microfinance institutions (MFIs). Using a worldwide sample of 1,151 MFIs active in 104 countries, we find that interest rates increase with aid volatility while average loan size (ALS) is inversely related to aid volatility. These results suggest that MFIs consider ALS as a signaling device for commitment to their social mission, but use interest rates as an adjustment variable to cope with uncertainty. The policy prescription to donor agencies wishing to curtail the rise in interest rates is to deliver subsidies predictably and transparently.

scholarly journals Microfinance Institutions' Mission Drift in Macroeconomic Context

2015 ◽  
Vol 28 (7) ◽  
pp. 1123-1137 ◽  
Author(s):  
Shufang Xu ◽  
James Copestake ◽  
Xinman Peng
Keyword(s):  
Microfinance Institutions ◽  
Mission Drift

scholarly journals Microfinance Meets the Market

2009 ◽  
Vol 23 (1) ◽  
pp. 167-192 ◽  
Author(s):  
Robert Cull ◽  
Asli Demirgüç-Kunt ◽  
Jonathan Morduch
Keyword(s):  
Interest Rates ◽  
Business Model ◽  
Microfinance Institutions ◽  
Social Business ◽  
Grameen Bank ◽  
Large Dataset ◽  
For Profit ◽  
The Future ◽  
Massive Scale ◽  
Single Path

In this paper, we examine the economic logic behind microfinance institutions and consider the movement from socially oriented nonprofit microfinance institutions to for- profit microfinance. Drawing on a large dataset that includes most of the world's leading microfinance institutions, we explore eight questions about the microfinance “industry”: Who are the lenders? How widespread is profitability? Are loans in fact repaid at the high rates advertised? Who are the customers? Why are interest rates so high? Are profits high enough to attract profit-maximizing investors? How important are subsidies? The evidence suggests that investors seeking pure profits would have little interest in most of the institutions we see that are now serving poorer customers. We will suggest that the future of microfinance is unlikely to follow a single path. The recent clash between supporters of profit-driven Banco Compartamos and of the Grameen Bank with its “social business” model offers us a false choice. Commercial investment is necessary to fund the continued expansion of microfinance, but institutions with strong social missions, many taking advantage of subsidies, remain best placed to reach and serve the poorest customers, and some are doing so at a massive scale. The market is a powerful force, but it cannot fill all gaps.

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