Research On The Mission Drift And Governance Of The Microfinance Institutions In China

In recent years, the rapid development of microfinance institutions (MFIs) not onlymade positive contributions for the whole world’s poverty alleviation and socialdevelopment, but also played a positive role in the development of low income groups toachieve self-development and the whole microfinance industry. With thecommercialization trend of microfinance industry, MFIs have difficult to balance thedouble bottom lines, financial goals and social goals. However, more and more MFIsstarted financing from commercial banks or capital market, which may help to improvetheir financial sustainability, but lead to increasingly serious deviation from the socialmission. The signs of mission drift exist widely, especially in China. Chinese MFIs are animportant strength to service "Three Rural" and they were highly valued by theGovernment. Whereas, there is prevalent phenomenon that pointed to "mission drift", suchas "Despise the poor and curry favor with the rich","Accumulating customers with morewealth" and "Keep away from poor farmers" and so on. Chinese MFIs drift from theirsocial mission seriously. Mission drift of MFIs will directly affect the quantity and qualityof their service for low income groups, and will not help to realize the social mission ofpoverty alleviation. So study on the mission drift of Chinese MFIs would have importantsignificances.Therefore, the paper mainly discussed the mission drift of Chinese MFIs by thecombination method of theoretical analysis and empirical analysis. Firstly, this paper takessocial goal as the starting point, combining the principal-agent theory, establishingdynamic game theory models of different levels, to analysis the mission drift systematically.Secondly, this paper makes empirical analysis of the factors with international anddomestic data and makes comparative analysis between them to find out the special factorsof Chinese MFIs. Finally, combing with foreign experience, this paper will put forwardsome suggestions on how to manage the mission drift for Chinese MFIs.