Commercialization and Mission Drift : Evidence from a Large Chinese Microfinance Institution

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 officer...

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Main Authors: Jia, Xiangping, Cull, Robert, Guo, Pei, Ma, Tao
Format: Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2016
Subjects:
IPO
Online Access:http://documents.worldbank.org/curated/en/2016/05/26396730/commercialization-mission-drift-evidence-large-chinese-microfinance-institution
http://hdl.handle.net/10986/24519
id okr-10986-24519
recordtype oai_dc
spelling okr-10986-245192021-04-23T14:04:22Z Commercialization and Mission Drift : Evidence from a Large Chinese Microfinance Institution Jia, Xiangping Cull, Robert Guo, Pei Ma, Tao CREDIT PROGRAM BORROWER MICROLOAN LIABILITY PUBLIC SECTOR COMMERCIAL BANKS JOINT LIABILITY STOCK AMOUNT OF LOANS INTEREST DUMMY VARIABLES EXTERNAL FUNDING RURAL BANKING INTEREST RATE EXCHANGE FORMAL LOAN DEVELOPING COUNTRIES REPAYMENTS POLITICAL ECONOMY POSITIVE COEFFICIENT PORTFOLIO RURAL CREDIT CREDIT COOPERATIVES LOAN FINANCIAL STATEMENT CREDITWORTHINESS LOAN AMOUNT BORROWERS GOVERNMENT ASSETS ASSET MANAGEMENT LOAN DECISIONS DUMMY VARIABLE INFLATION INTERNATIONAL BANK STATE BANK DEVELOPING COUNTRY LENDER MICROFINANCE INSTITUTIONS CENTRAL BANK MATURITY SMALL BUSINESS OVERDUE LOANS FINANCIAL SUSTAINABILITY CREDIT COOPERATIVE GROUP LENDING LEGAL CONSTRAINTS REPAYMENT INCENTIVES FINANCIAL INSTITUTION COMMERCIAL BORROWING DISBURSEMENT COMMERCIAL BANK PORTFOLIOS CONTRACTS POOR BORROWERS INTEREST RATES LENDING DECISIONS FINANCIAL INSTITUTIONS LOCAL GOVERNMENT LOAN REPAYMENTS LOAN MATURITY LENDERS LOANS CREDIT PROGRAMS AGRICULTURAL BANK INVENTORY LOAN SIZES LEGAL FRAMEWORK FINANCE PORTFOLIO QUALITY LOAN TERMS SMALL LOANS INDIVIDUAL LOAN IPO TRANSACTION RURAL FINANCE LOAN REPAYMENT REPAYMENT HISTORIES GOOD REPAYMENT HISTORY CREDIT PROVIDERS REPAYMENT DIFFICULTIES FUTURE CREDIT ACCESS MICRO LOAN RETURNS REPAYMENT FINANCIAL PERFORMANCE REPAYMENT RATES DISBURSEMENTS CREDIT HISTORIES INFORMAL PROVIDERS LOAN PORTFOLIO SHARES FACE VALUE BALANCE SHEET TRANSACTION COSTS DEFAULT LOAN QUALITY MARKET COMMERCIAL BANK LOAN POSTAL SAVINGS LOAN OFFICER MICROCREDIT OVERHEAD COSTS MICROFINANCE BANK LOAN GOVERNMENT SUBSIDIES LOAN OFFICERS LOAN APPLICATIONS INVESTMENT COMMERCIAL BANKS SHARE CREDIT RATIONING LOAN PORTFOLIOS COLLATERAL POVERTY FINANCIAL RISKS GROUP GUARANTEE LOAN SIZE REVENUE PROFIT FINANCIAL SUPPORT RISK MANAGEMENT CONSUMER PRICE INDEX LENDING CHECK REPAYMENT PERFORMANCE RISK AVERSION PROFITS OUTSTANDING LOANS LIABILITIES DURABLES GUARANTEE SAVINGS BANK DEVELOPMENT BANK INCOME LEVEL MICROFINANCE INSTITUTION MICROENTERPRISES 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. 2016-06-13T22:17:49Z 2016-06-13T22:17:49Z 2016-05 Working Paper http://documents.worldbank.org/curated/en/2016/05/26396730/commercialization-mission-drift-evidence-large-chinese-microfinance-institution http://hdl.handle.net/10986/24519 English en_US Policy Research Working Paper;No. 7680 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper East Asia and Pacific China
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic CREDIT PROGRAM
BORROWER
MICROLOAN
LIABILITY
PUBLIC SECTOR COMMERCIAL BANKS
JOINT LIABILITY
STOCK
AMOUNT OF LOANS
INTEREST
DUMMY VARIABLES
EXTERNAL FUNDING
RURAL BANKING
INTEREST RATE
EXCHANGE
FORMAL LOAN
DEVELOPING COUNTRIES
REPAYMENTS
POLITICAL ECONOMY
POSITIVE COEFFICIENT
PORTFOLIO
RURAL CREDIT
CREDIT COOPERATIVES
LOAN
FINANCIAL STATEMENT
CREDITWORTHINESS
LOAN AMOUNT
BORROWERS
GOVERNMENT ASSETS
ASSET MANAGEMENT
LOAN DECISIONS
DUMMY VARIABLE
INFLATION
INTERNATIONAL BANK
STATE BANK
DEVELOPING COUNTRY
LENDER
MICROFINANCE INSTITUTIONS
CENTRAL BANK
MATURITY
SMALL BUSINESS
OVERDUE LOANS
FINANCIAL SUSTAINABILITY
CREDIT COOPERATIVE
GROUP LENDING
LEGAL CONSTRAINTS
REPAYMENT INCENTIVES
FINANCIAL INSTITUTION
COMMERCIAL BORROWING
DISBURSEMENT
COMMERCIAL BANK
PORTFOLIOS
CONTRACTS
POOR BORROWERS
INTEREST RATES
LENDING DECISIONS
FINANCIAL INSTITUTIONS
LOCAL GOVERNMENT
LOAN REPAYMENTS
LOAN MATURITY
LENDERS
LOANS
CREDIT PROGRAMS
AGRICULTURAL BANK
INVENTORY
LOAN SIZES
LEGAL FRAMEWORK
FINANCE
PORTFOLIO QUALITY
LOAN TERMS
SMALL LOANS
INDIVIDUAL LOAN
IPO
TRANSACTION
RURAL FINANCE
LOAN REPAYMENT
REPAYMENT HISTORIES
GOOD
REPAYMENT HISTORY
CREDIT PROVIDERS
REPAYMENT DIFFICULTIES
FUTURE
CREDIT ACCESS
MICRO LOAN
RETURNS
REPAYMENT
FINANCIAL PERFORMANCE
REPAYMENT RATES
DISBURSEMENTS
CREDIT HISTORIES
INFORMAL PROVIDERS
LOAN PORTFOLIO
SHARES
FACE VALUE
BALANCE SHEET
TRANSACTION COSTS
DEFAULT
LOAN QUALITY
MARKET
COMMERCIAL BANK LOAN
POSTAL SAVINGS
LOAN OFFICER
MICROCREDIT
OVERHEAD COSTS
MICROFINANCE
BANK LOAN
GOVERNMENT SUBSIDIES
LOAN OFFICERS
LOAN APPLICATIONS
INVESTMENT
COMMERCIAL BANKS
SHARE
CREDIT RATIONING
LOAN PORTFOLIOS
COLLATERAL
POVERTY
FINANCIAL RISKS
GROUP GUARANTEE
LOAN SIZE
REVENUE
PROFIT
FINANCIAL SUPPORT
RISK MANAGEMENT
CONSUMER PRICE INDEX
LENDING
CHECK
REPAYMENT PERFORMANCE
RISK AVERSION
PROFITS
OUTSTANDING LOANS
LIABILITIES
DURABLES
GUARANTEE
SAVINGS BANK
DEVELOPMENT BANK
INCOME LEVEL
MICROFINANCE INSTITUTION
MICROENTERPRISES
spellingShingle CREDIT PROGRAM
BORROWER
MICROLOAN
LIABILITY
PUBLIC SECTOR COMMERCIAL BANKS
JOINT LIABILITY
STOCK
AMOUNT OF LOANS
INTEREST
DUMMY VARIABLES
EXTERNAL FUNDING
RURAL BANKING
INTEREST RATE
EXCHANGE
FORMAL LOAN
DEVELOPING COUNTRIES
REPAYMENTS
POLITICAL ECONOMY
POSITIVE COEFFICIENT
PORTFOLIO
RURAL CREDIT
CREDIT COOPERATIVES
LOAN
FINANCIAL STATEMENT
CREDITWORTHINESS
LOAN AMOUNT
BORROWERS
GOVERNMENT ASSETS
ASSET MANAGEMENT
LOAN DECISIONS
DUMMY VARIABLE
INFLATION
INTERNATIONAL BANK
STATE BANK
DEVELOPING COUNTRY
LENDER
MICROFINANCE INSTITUTIONS
CENTRAL BANK
MATURITY
SMALL BUSINESS
OVERDUE LOANS
FINANCIAL SUSTAINABILITY
CREDIT COOPERATIVE
GROUP LENDING
LEGAL CONSTRAINTS
REPAYMENT INCENTIVES
FINANCIAL INSTITUTION
COMMERCIAL BORROWING
DISBURSEMENT
COMMERCIAL BANK
PORTFOLIOS
CONTRACTS
POOR BORROWERS
INTEREST RATES
LENDING DECISIONS
FINANCIAL INSTITUTIONS
LOCAL GOVERNMENT
LOAN REPAYMENTS
LOAN MATURITY
LENDERS
LOANS
CREDIT PROGRAMS
AGRICULTURAL BANK
INVENTORY
LOAN SIZES
LEGAL FRAMEWORK
FINANCE
PORTFOLIO QUALITY
LOAN TERMS
SMALL LOANS
INDIVIDUAL LOAN
IPO
TRANSACTION
RURAL FINANCE
LOAN REPAYMENT
REPAYMENT HISTORIES
GOOD
REPAYMENT HISTORY
CREDIT PROVIDERS
REPAYMENT DIFFICULTIES
FUTURE
CREDIT ACCESS
MICRO LOAN
RETURNS
REPAYMENT
FINANCIAL PERFORMANCE
REPAYMENT RATES
DISBURSEMENTS
CREDIT HISTORIES
INFORMAL PROVIDERS
LOAN PORTFOLIO
SHARES
FACE VALUE
BALANCE SHEET
TRANSACTION COSTS
DEFAULT
LOAN QUALITY
MARKET
COMMERCIAL BANK LOAN
POSTAL SAVINGS
LOAN OFFICER
MICROCREDIT
OVERHEAD COSTS
MICROFINANCE
BANK LOAN
GOVERNMENT SUBSIDIES
LOAN OFFICERS
LOAN APPLICATIONS
INVESTMENT
COMMERCIAL BANKS
SHARE
CREDIT RATIONING
LOAN PORTFOLIOS
COLLATERAL
POVERTY
FINANCIAL RISKS
GROUP GUARANTEE
LOAN SIZE
REVENUE
PROFIT
FINANCIAL SUPPORT
RISK MANAGEMENT
CONSUMER PRICE INDEX
LENDING
CHECK
REPAYMENT PERFORMANCE
RISK AVERSION
PROFITS
OUTSTANDING LOANS
LIABILITIES
DURABLES
GUARANTEE
SAVINGS BANK
DEVELOPMENT BANK
INCOME LEVEL
MICROFINANCE INSTITUTION
MICROENTERPRISES
Jia, Xiangping
Cull, Robert
Guo, Pei
Ma, Tao
Commercialization and Mission Drift : Evidence from a Large Chinese Microfinance Institution
geographic_facet East Asia and Pacific
China
relation Policy Research Working Paper;No. 7680
description 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.
format Working Paper
author Jia, Xiangping
Cull, Robert
Guo, Pei
Ma, Tao
author_facet Jia, Xiangping
Cull, Robert
Guo, Pei
Ma, Tao
author_sort Jia, Xiangping
title Commercialization and Mission Drift : Evidence from a Large Chinese Microfinance Institution
title_short Commercialization and Mission Drift : Evidence from a Large Chinese Microfinance Institution
title_full Commercialization and Mission Drift : Evidence from a Large Chinese Microfinance Institution
title_fullStr Commercialization and Mission Drift : Evidence from a Large Chinese Microfinance Institution
title_full_unstemmed Commercialization and Mission Drift : Evidence from a Large Chinese Microfinance Institution
title_sort commercialization and mission drift : evidence from a large chinese microfinance institution
publisher World Bank, Washington, DC
publishDate 2016
url http://documents.worldbank.org/curated/en/2016/05/26396730/commercialization-mission-drift-evidence-large-chinese-microfinance-institution
http://hdl.handle.net/10986/24519
_version_ 1764456932486152192