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Outreach and Mission Drift in Microfinance: An Interpretation of the New Trend

Author

Listed:
  • Maurizio Caserta

    (University of Catania)

  • Francesco Reito

    (University of Catania)

Abstract

This paper presents a theoretical description of some of the recent developments in the financial programs offered by microfinance institutions (MFIs). We show that even under for-profit MFIs, there is not necessarily a crowding out of the poorest microentrepreneurs, and that MFIs may optimally choose to offer both joint liability contracts (to poor borrowers) and individual liability contracts (to wealthier borrowers).

Suggested Citation

  • Maurizio Caserta & Francesco Reito, 2013. "Outreach and Mission Drift in Microfinance: An Interpretation of the New Trend," Economics Bulletin, AccessEcon, vol. 33(1), pages 167-178.
    • Handle: RePEc:ebl:ecbull:eb-12-00664
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    References listed on IDEAS

    as
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    6. Shubhashis Gangopadhyay & Maitreesh Ghatak & Robert Lensink, 2005. "Joint Liability Lending and the Peer Selection Effect," Economic Journal, Royal Economic Society, vol. 115(506), pages 1005-1015, October.
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    8. Francesco Reito, 2011. "Unproductive Investment And Rent Extraction," Bulletin of Economic Research, Wiley Blackwell, vol. 63(3), pages 213-230, July.
    9. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2006. "Bank concentration, competition, and crises: First results," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1581-1603, May.
    10. Beatriz Armendáriz & Ariane Szafarz, 2011. "On Mission Drift in Microfinance Institutions," World Scientific Book Chapters, in: Beatriz Armendáriz & Marc Labie (ed.), The Handbook Of Microfinance, chapter 16, pages 341-366, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Caserta, Maurizio & Monteleone, Simona & Reito, Francesco, 2018. "The trade-off between profitability and outreach in microfinance," Economic Modelling, Elsevier, vol. 72(C), pages 31-41.

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    More about this item

    Keywords

    Individual liability lending; joint liability lending; outreach; mission drift; for-profit microfinance institutions;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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