Commercialization and Mission Drift

Jia, Xiangping; Cull, Robert; Guo, Pei; Ma, Tao

Commercialization and Mission Drift

2016

Jia, Xiangping | Cull, Robert | Guo, Pei | Ma, Tao

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.

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AGROVOC Keywords

commercial banks contracts credit cooperatives developing countries finance financial institutions inflation interest rates international bank investment lending liabilities liability loans local government maturity microcredit microenterprises microfinance overhead costs poverty profit repayment returns risk management rural finance stock transaction costs

Bibliographic information

Other Subjects

Shares; Small loans; Bank loan; Ipo; Loan amount; Loan officers; Financial support; Check; Microloan; Loan repayments; Financial statement; Transaction; Group guarantee; Face value; Default; Central bank; Credit program; Repayment history; Postal savings; Loan portfolio; Portfolio quality; Risk aversion; Lenders; Government assets; Loan applications; Loan maturity; Dummy variable; Disbursements; Credit cooperative; Dummy variables; Rural banking; Commercial bank loan; Consumer price index; Repayment performance; Credit providers; Profits; Amount of loans; Future; Savings bank; Commercial bank; Credit rationing; Revenue; Repayment histories; Legal framework; Positive coefficient; Political economy; Financial institution; Repayment incentives; Balance sheet; Borrowers; Credit access; Loan officer; Lending decisions; Repayments; Portfolios; Borrower; Legal constraints; Loan portfolios; Exchange; Small business; Overdue loans; State bank; Informal providers; Micro loan; Repayment difficulties; Credit histories; Asset management; Joint liability; Disbursement; Creditworthiness; Government subsidies; Loan repayment; Market; Interest rate; Loan decisions; Poor borrowers; Income level; Loan sizes; Loan; Individual loan; Interest; Share; Guarantee; Financial sustainability; Formal loan; Development bank; Portfolio; Lender; Commercial borrowing; Collateral; Public sector commercial banks; Loan size; Outstanding loans; Repayment rates; Financial risks; Developing country; Durables; Group lending; Good; Agricultural bank; Loan quality; Loan terms; Financial performance; Inventory; Rural credit; External funding; Microfinance institutions; Microfinance institution; Credit programs

Language

English

In AGRIS since: 2021-06-15

Format: AGRIS AP

Data Provider

This bibliographic record has been provided by World Bank

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Links

http://hdl.handle.net/10986/24519

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