The Trade-Off Between Sustainability And Outreach: The Experience Of Commercial Microfinance Institutions
Date
2013
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Haverford College. Department of Economics
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Thesis
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Award
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eng
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Open Access
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Abstract
The paper examines the recent trend of commercialization in the Microfinance Industry in a cross-country analysis. More specifically, the paper seeks to analyze the effects of commercialization on the sustainability and outreach of individual Microfinance Institutions (MFIs). The author uses data on 854 MFIs in 102 developing countries from the Microfinance Information eXchange (MIX). The author employs fixed effects and OLS econometrics techniques, with the later accounting for endogeneity, to estimate the effects of commercialization. Ultimately, the paper finds that commercialization increases MFI sustainability and decreases outreach. The latter provides evidence of mission drift. Ultimately, if MFIs aim to alleviate poverty and provide financial services to the poorest, then commercialization may not be the solution.