True or False: Trade-offs occur between social performance and financial performance in microfinance. Conventional wisdom says true. Extending formal financial services to poor and hard-to-reach clientele necessarily entails higher costs and lower per unit returns and is, subsequently, harder to scale up. The trade-off inherent in this relationship creates incentives for microfinance institutions (MFIs) to move up-market and away from their traditional poor clientele—a phenomenon known as mission drift.
Gary Woller is president of Woller & Associates, an international development consulting firm specializing in microfinancance, micro-, small-, and medium-enterprise development, and public policy analysis. Dr. Woller has published numerous articles on development and microfinance in scholarly journals. He is the co-founder and former editor of the Journal of Microfinance and is currently the facilitator of the Client Assessment Working Group.
Issue and Volume
BYU ScholarsArchive Citation
"Trade-offs Between Social and Financial Performance,"
Journal of Microfinance / ESR Review: Vol. 9
, Article 5.
Available at: https://scholarsarchive.byu.edu/esr/vol9/iss2/5