Journal of Business & Financial Affairs

Competition and Mission Drift in Microfinance: Does Competition has a Mission Drift Impact?

Abstract

Hailu Abebe Wondirad

This paper analyses both empirical and theoretical evidences on competition and mission drift. The main objective of the paper is to pin-down whether competition leads to mission drift. A Comprehensive empirical examination on competition and mission drift has been conducted. To understand the theoretical foundation of the relationship between competition and MFIs’ mission, a theoretical model has also seated. The paper suggests that competition helps MFIs to keep their mission of serving the marginalized poor people in such a way that competition pushes MFIs towards the unmet market demand. The analysis also finds that the results are mixed, and it is difficult and ambiguous to disentangle the phenomena of mission drift which has occurred due to competition.