A Model of Mission Drift in Microfinance Institutions

Suman Ghosh () and Eric Van Tassel ()
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Suman Ghosh: Department of Economics, College of Business, Florida Atlantic University

No 8003, Working Papers from Department of Economics, College of Business, Florida Atlantic University

Abstract: In this paper we offer a theoretical examination of the phenomenon known as mission drift. In recent years there have been claims that the entry of large donors with deep pockets have led to a mission drift phenomenon, whereby microfinance institutions who were previously catering to the poorest agents have drifted towards catering to the less poor. We offer an explanation for how the change in the lending portfolio of a poverty minimizing microfinance institution might be linked to the phenomenon of increasing commercialization through the advent of these large profit oriented donors. The degree to which lending portfolios change turns out to be a function of both the supply of donor funds and the strategic interaction between heterogeneous microfinance institutions.

Keywords: microfinance; mission drift; poverty (search for similar items in EconPapers)
JEL-codes: G21 O12 O16 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2008-12
New Economics Papers: this item is included in nep-mfd
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Citations: View citations in EconPapers (24)

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