Commercialization and Mission Drift

Front-line loan officers of microfinance institutions are important in acquiring information on potential borrowers and selecting them in accordance with the microfinance institution's mission. This study uses a unique data set on loan officers and their loan portfolios from China's largest nongovernmental organization microfinance institution to test whether officers' personal characteristics affect the size and quality of their loans. The analysis uses a period in which the institution shifted from reliance on government donations and subsidies to commercial sources of funding. Imposing more commercial incentives on loan officers could affect how they balance potentially competing objectives to serve the poor and pursue profitability. The paper finds that loan officers who were formerly farmers or worked in local government were better able to maintain lending to poorer borrowers, without incurring substantially lower repayment rates on their loans. In short, it appears that the career backgrounds of loan officers did play a role in preventing mission drift.

Bibliographic Details

Main Authors:	Jia, Xiangping, Cull, Robert, Guo, Pei, Ma, Tao
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2016-05
Subjects:	CREDIT PROGRAM, BORROWER, MICROLOAN, LIABILITY, PUBLIC SECTOR COMMERCIAL BANKS, JOINT LIABILITY, STOCK, AMOUNT OF LOANS, INTEREST, DUMMY VARIABLES, EXTERNAL FUNDING, RURAL BANKING, INTEREST RATE, EXCHANGE, FORMAL LOAN, DEVELOPING COUNTRIES, REPAYMENTS, POLITICAL ECONOMY, POSITIVE COEFFICIENT, PORTFOLIO, RURAL CREDIT, CREDIT COOPERATIVES, LOAN, FINANCIAL STATEMENT, CREDITWORTHINESS, LOAN AMOUNT, BORROWERS, GOVERNMENT ASSETS, ASSET MANAGEMENT, LOAN DECISIONS, DUMMY VARIABLE, INFLATION, INTERNATIONAL BANK, STATE BANK, DEVELOPING COUNTRY, LENDER, MICROFINANCE INSTITUTIONS, CENTRAL BANK, MATURITY, SMALL BUSINESS, OVERDUE LOANS, FINANCIAL SUSTAINABILITY, CREDIT COOPERATIVE, GROUP LENDING, LEGAL CONSTRAINTS, REPAYMENT INCENTIVES, FINANCIAL INSTITUTION, COMMERCIAL BORROWING, DISBURSEMENT, COMMERCIAL BANK, PORTFOLIOS, CONTRACTS, POOR BORROWERS, INTEREST RATES, LENDING DECISIONS, FINANCIAL INSTITUTIONS, LOCAL GOVERNMENT, LOAN REPAYMENTS, LOAN MATURITY, LENDERS, LOANS, CREDIT PROGRAMS, AGRICULTURAL BANK, INVENTORY, LOAN SIZES, LEGAL FRAMEWORK, FINANCE, PORTFOLIO QUALITY, LOAN TERMS, SMALL LOANS, INDIVIDUAL LOAN, IPO, TRANSACTION, RURAL FINANCE, LOAN REPAYMENT, REPAYMENT HISTORIES, GOOD, REPAYMENT HISTORY, CREDIT PROVIDERS, REPAYMENT DIFFICULTIES, FUTURE, CREDIT ACCESS, MICRO LOAN, RETURNS, REPAYMENT, FINANCIAL PERFORMANCE, REPAYMENT RATES, DISBURSEMENTS, CREDIT HISTORIES, INFORMAL PROVIDERS, LOAN PORTFOLIO, SHARES, FACE VALUE, BALANCE SHEET, TRANSACTION COSTS, DEFAULT, LOAN QUALITY, MARKET, COMMERCIAL BANK LOAN, POSTAL SAVINGS, LOAN OFFICER, MICROCREDIT, OVERHEAD COSTS, MICROFINANCE, BANK LOAN, GOVERNMENT SUBSIDIES, LOAN OFFICERS, LOAN APPLICATIONS, INVESTMENT, COMMERCIAL BANKS, SHARE, CREDIT RATIONING, LOAN PORTFOLIOS, COLLATERAL, POVERTY, FINANCIAL RISKS, GROUP GUARANTEE, LOAN SIZE, REVENUE, PROFIT, FINANCIAL SUPPORT, RISK MANAGEMENT, CONSUMER PRICE INDEX, LENDING, CHECK, REPAYMENT PERFORMANCE, RISK AVERSION, PROFITS, OUTSTANDING LOANS, LIABILITIES, DURABLES, GUARANTEE, SAVINGS BANK, DEVELOPMENT BANK, INCOME LEVEL, MICROFINANCE INSTITUTION, MICROENTERPRISES,
Online Access:	http://documents.worldbank.org/curated/en/2016/05/26396730/commercialization-mission-drift-evidence-large-chinese-microfinance-institution https://hdl.handle.net/10986/24519
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