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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
    1. Sergio Navajas & Jonathan Conning & Claudio Gonzalez-Vega, 2003. "Lending technologies, competition and consolidation in the market for microfinance in Bolivia," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(6), pages 747-770.
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    3. 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..
    4. Madajewicz, Malgosia, 2011. "Joint liability versus individual liability in credit contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 77(2), pages 107-123, February.
    5. Van Tassel, Eric, 1999. "Group lending under asymmetric information," Journal of Development Economics, Elsevier, vol. 60(1), pages 3-25, October.
    6. Xavier Giné & Dean Karlan, 2009. "Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups," Working Papers 970, Economic Growth Center, Yale University.
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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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