Microfinance Institutions' Mission Drift in Macroeconomic Context

Shufang Xu, James Copestake and Xinman Peng

Journal of International Development, 2016, vol. 28, issue 7, 1123-1137

Abstract: We theoretically discuss the potential macroeconomic influences on microfinance institutions' (MFIs') depth of outreach and provide empirical evidence, using panel analysis, to investigate determinants of average loan balance (ALB) per borrower as a percentage of gross national income per capita, as a proxy indicator for poverty focus or depth of outreach. ALB is found to be positively associated with operational self‐sufficiency, a finding that is consistent with the mission drift hypothesis. But it is also positively associated with the shares in GDP of net foreign direct investment and domestic credit to the private sector. This suggests mission drift is not only associated with MFI‐specific factors but also influenced by macroeconomic context. Copyright © 2015 John Wiley & Sons, Ltd.

Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:28:y:2016:i:7:p:1123-1137

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