Microfinance Mission Drift: A Case Study of Pakistan
Author: Muhammad Imran

The determinants of Microfinance Mission Drift, Average Loan Size and Operational elfsufficiency of twenty five MFIs are estimated for the period 2005 to 2012 in case of Pakistan. The panel data estimation technique with GMM is applied that better describe the performance models by taking account of endogemiey The Average Loan Size and Operational Self-sufficiency are used for the proxy of Mission Drift. The explanatory variables MFI Age, MFI Size, Portfolio at Risk > 30 days, Average Cost and Average profit are used for the determinants of Mission Drift. Country specific variable, GDP per Capita is used for the economic condition of the country and the dummy variable for the Non-Profit Organization is also used as explanatory variable. The results of the study indicate that The Microfinance Institutions (MFIs) are drifting from their primary objective of disbursing loan to poor segment of society. Average Cost, Average Profit and MFI Age are positively and significantly related to Average Loan Size suggesting existence of Mission Drift. Dummy of NPO (non-profit Organization) is negatively related to Average Loan Size. Similarly in the second model average cost, average profit and MFI age are positively and significantly related with Operational Self-sufficiency and give proof of mission drift. The Portfolio Risk > 30 days is negatively and significantly related to operational self sufficiency. This also shows that MFIs are drifting from their primary objective. For robustness check two models are estimated and results show that microfinance is deviating from mission as more lending is given to individuals and in urban market. Supervisor:- Dr. Attya Yasmin Javid

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Keywords : Microfinance, Microfinance-Pakistan, Mission Drift, Mission Drift-Pakistan
Supervisor: Attiya Yasmin Javid

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