| Since Muhammad Yunus founded the Grameen Bank in1970s, the microfinanceindustry, whose purpose as social object is to provide financial services for the poor andthose who are absent of financial resources, has achieved a rapid worldwide development.However, due to the microfinance institutions’ serious reliance on grants, subsidies anddonations, they hadn’t focus on their own financial sustainability, which resulting in largesum of bad debt and the collapse of many previous microfinance projects. Since thenmicrofinance institutions began to pay attention to financial performance. Yet during thepursuit of financial sustainability, microfinance institutions got into the “mission drift”dilemma.China’s microfinance industry started late, but developed fast. It has played animportant role in helping poor farmers to develop production and get out of poverty,mitigating the tight supply and demand situation of rural finance, promoting thedevelopment of "Three Dimensional Rural Issues" and stimulating the reform of ruralfinancial system. Yet now they also face the problems of lacking of financial sustainability,mission drift and so on.With the rapid development of microfinance industry, the international and domesticmicrofinance institutions have gradually stepped into commercialization. thusmicrofinance institutions will inevitably face the double bottom line of social and financialtargets. Firstly, this paper analyzes the relationship between the double objectives throughthe establishment of a theoretical model therefore concludes that the double objectives canpromote each other under certain conditions. Then in the empirical study section, both ofthe data of international and domestic microfinance institutions are picked up to establishan simultaneous equations model. Both the statistical and econometric analysis verified therelationship between the double objectives. Finally, this paper proposed some relevantpolicy recommendations for the development of China’s microfinance institutions. |
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