Transcript UMMSession_Engels - e-MFP

“Mission Drift in Microfinance: The influence of
institutional and country risk indicators on the
trade-off between the financial and social
performances of MFIs”
Pim Engels
UMM Award 1st Prize 2009
[email protected]
www.e-mfp.eu
Mission Drift in Alive!
"We have to note that some microcredit providers
have increased their earnings while their costs
decreased. In such cases, financial gain has become
more important than sustainable development.”
(Princess Máxima, 2010)
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Definition(s) of Mission Drift
 "In essence, it’s a concern about for-profit investors overriding the
interest of other stakeholders, mainly the interest of clients, by
inevitably pressuring management for higher interest rates and quick
profits, therefore drifting from the mission of serving the best interest of
clients.” (Carlos Danel, co-founder of Compartamos Banco, 2010)
 “… a shift in the composition of new clients, or a reorientation from
poorer to wealthier clients among existing clients.” (Cull, DemirgücKunt, and Morduch, 2007)
 “ … a phenomenon whereby an MFI increases its average loan size by
reaching out wealthier clients neither for progressive lending nor for
cross subsidization reasons.” (Armendáriz and Szafarz, 2009)
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Introduction to Thesis
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Supervision Thorsten Beck (Tilburg University); internship ING
Microfinance
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Objective: Find emperical evidence on mission drift, allowing
institutional investors to recognize and prevent mission drift taking
place in their portfolios
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Problem statement
 What is the explanatory function of the institutional and country risk
indicators in predicting the financial and social performance of MFIs?
 How do institutional and country risk indicators affect the trade-off
between the financial and social performance of MFIs?
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Introduction to Research Model
 Operational-self sufficiency
 Return on assets
 Profit margin
 Type of institution
 Regulation
 Network membership
 Age of MFI
 Size of MFI
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 Average loan size/GDP per capita
 Average loan size/GDP per capita 20% poorest
 Percentage women borrowers
 Country risk indicator
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Main Conclusions
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About
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[email protected]
Internship Grameen Bank (2007)
Internship ING Microfinance (2009)
Graduated MSc Economics Tilburg University (2009)
Winner University Meets Microfinance Award (2009)
Consultant in the Field of Inclusive Finance
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