Microfinance institutions' mission drift in macroeconomic context

We theoretically discuss the potential macroeconomic influences on MFIs’ depth of outreach and provide empirical evidence, using panel analysis, to investigate determinants of average loan balance per borrower as a percentage of national GNI per capita (ALB), as a proxy indicator for poverty focus or depth of outreach. ALB is found to be positively associated with operational self-sufficiency, a finding that is consistent with the mission drift hypothesis. But it is also positively associated with the shares in GDP of net foreign direct investment (FDI) and domestic credit to the private sector (DCPS). This suggests mission drift is associated not only with MFI-specific factors, but also influence by macroeconomic context.