Commercialization and Mission Drift: A Cross Country Evidence on Transformation of Microfinance Industry

Afsheen Abrar, Atitya Y. Javid

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Abstract

The present study examine the most important issue faced by microfinance institutions around the world in this present era that is the commercialization trend and drifting size. This study will analyze whether the commercialization from their primary function of serving poor class of the society to moving towards better off customer in order to satisfy their urge of financial benefits. This study is using average loan size as proxy of mission drift with operational self sufficiency as profit measure, productivity as cost measure and repayment risk as independent variables in the study .The study also accommodate age ,size as control variables .Data has been taken from all the six regions of the world from 72 countries for the years 2003 to 2009.The econometric evidence using random effect estimation technique reveals that profitability and risk are positively related with average loan size where as cost is inverse relation with size of loan . The impact of age and size varies from region to region.
Original languageEnglish
Pages (from-to)122-125
JournalInternational Journal of Trade, Economics and Finance
Volume5
Issue number1
DOIs
Publication statusPublished - Feb 2014
Externally publishedYes

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Industry
Microfinance
Commercialization
Loans
Costs
Random effects
Profit
Control variable
Econometrics
Microfinance institutions
Self-sufficiency
Profitability
Productivity

Keywords

  • MFIs
  • Average loan size (AVGLS)
  • Operational self sufficiency (OSS)
  • Reciprocal of productivity (PROD)
  • REM

Cite this

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abstract = "The present study examine the most important issue faced by microfinance institutions around the world in this present era that is the commercialization trend and drifting size. This study will analyze whether the commercialization from their primary function of serving poor class of the society to moving towards better off customer in order to satisfy their urge of financial benefits. This study is using average loan size as proxy of mission drift with operational self sufficiency as profit measure, productivity as cost measure and repayment risk as independent variables in the study .The study also accommodate age ,size as control variables .Data has been taken from all the six regions of the world from 72 countries for the years 2003 to 2009.The econometric evidence using random effect estimation technique reveals that profitability and risk are positively related with average loan size where as cost is inverse relation with size of loan . The impact of age and size varies from region to region.",
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Commercialization and Mission Drift : A Cross Country Evidence on Transformation of Microfinance Industry. / Abrar, Afsheen ; Javid, Atitya Y.

In: International Journal of Trade, Economics and Finance, Vol. 5, No. 1, 02.2014, p. 122-125.

Research output: Contribution to journalArticleAcademicpeer-review

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AB - The present study examine the most important issue faced by microfinance institutions around the world in this present era that is the commercialization trend and drifting size. This study will analyze whether the commercialization from their primary function of serving poor class of the society to moving towards better off customer in order to satisfy their urge of financial benefits. This study is using average loan size as proxy of mission drift with operational self sufficiency as profit measure, productivity as cost measure and repayment risk as independent variables in the study .The study also accommodate age ,size as control variables .Data has been taken from all the six regions of the world from 72 countries for the years 2003 to 2009.The econometric evidence using random effect estimation technique reveals that profitability and risk are positively related with average loan size where as cost is inverse relation with size of loan . The impact of age and size varies from region to region.

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