Mission drift in microfinance: are the concerns really worrying? Recent cross-country results

Ashim Kar ()

International Review of Applied Economics, 2013, vol. 27, issue 1, 44-60

Abstract: This paper explores the impact of profitability on depth of outreach in microfinance institutions, a trade-off between which is commonly known as ‘mission drift', using a unique panel database containing 4--6 years' observations from 409 MFIs in 71 countries. The concerns for ‘mission drift' seemed invalid, although several countervailing results also emerged when scaling up indicators of size and age are included. The positive significant association between MFI-size and average loan amount suggests some extent of mission drift. Similar results were found when female borrowers' participation was the measure for outreach. However, the study largely fails to validate that the concerns for mission drift were true if it is defined as a distinctive trade-off between increased profit-motivation and depth of outreach of MFIs.

Date: 2013
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DOI: 10.1080/02692171.2012.700701

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