The relationship between microfinance mission drift and financial returns to stakeholders

Some microfinance institutions (MFIs) can drift from their social mission, generating well-studied effects for their borrowers. We focus on the lesser-known effect of mission drift on the financial return to other stakeholders (employees, government, micro-savers, and banking creditors). Using a sample of 534 MFIs, we calculated the economic value distributed by the MFI to these stakeholders by considering salaries, taxes, and interest paid. We found a negative relationship between average loan size and return to employees (RTE), government, and banking creditors, and a positive relationship between women borrowers and RTE and government. This is explained by the fact that mission-focused MFIs are usually small, labor-intensive institutions with a stable business model. We found a positive relationship between average loan size and return to micro-savers, and a negative relationship between women borrowers and return to micro-savers. The reason is that many mission-focused MFIs do not offer micro-savings, undermining financial inclusion