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Sustainability and Mission Drift in Microfinance

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Use this URL to link or cite this item: http://hdl.handle.net/10227/720
Title: Sustainability and Mission Drift in Microfinance
Author: Kar, Ashim Kumar
Contributor: Hanken School of Economics, Department of Economics, Economics
Thesis level: Doctoral thesis
Belongs to series: Economics and Society - 217
ISSN: 0424-7256
ISBN: 978-952-232-099-5
Abstract: Microfinance institutions (MFIs) are constrained by double bottom-lines: meeting social obligations (the first bottom-line) and obtaining financial self-sufficiency (the second bottom-line). The proponents of the first bottom-line, however, are increasingly concerned that there is a trade-off between these two bottom-lines—i.e., getting hold of financial self-sufficiency may lead MFIs to drift away from their original social mission of serving the very poor, commonly known as mission drift in microfinance which is still a controversial issue. This study aims at addressing the concerns for mission drift in microfinance in a performance analysis framework. Chapter 1 deals with theoretical background, motivation and objectives of the topic. Then the study explores the validity of three major and related present-day concerns. Chapter 2 explores the impact of profitability on outreach-quality in MFIs, commonly known as mission drift, using a unique panel database that contains 4-9 years’ observations from 253 MFIs in 69 countries. Chapter 3 introduces factor analysis, a multivariate tool, in the process of analysing mission drift in microfinance and the exercise in this chapter demonstrates how the statistical tool of factor analysis can be utilised to examine this conjecture. In order to explore why some microfinance institutions (MFIs) perform better than others, Chapter 4 looks at factors which have an impact on several performance indicators of MFIs—profitability or sustainability, repayment status and cost indicators—based on quality-data on 353 institutions in 77 countries. The study also demonstrates whether such mission drift can be avoided while having self-sustainability. In Chapter 5 we examine the impact of capital and financing structure on the performance of microfinance institutions where estimations with instruments have been performed using a panel dataset of 782 MFIs in 92 countries for the period 2000-2007. Finally, Chapter 6 concludes the study by summarising the results from the previous chapters and suggesting some directions for future studies.
URI: http://hdl.handle.net/10227/720
URN:ISBN:978-952-232-099-5
Date: 2010-11-01
Copyright information: This publication is copyrighted. You may download, display and print it for Your own personal use. Commercial use is prohibited.
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