nep-mfd New Economics Papers
on Microfinance
Issue of 2009‒01‒03
one paper chosen by
Olivier Dagnelie
Instituto de Analisis Economico, CSIC

  1. A Model of Mission Drift in Microfinance Institutions By Suman Ghosh; Eric Van Tassel

  1. By: Suman Ghosh (Department of Economics, College of Business, Florida Atlantic University); Eric Van Tassel (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
    JEL: O12 O16 G21
    Date: 2008–12

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