Commercialization and Mission Drift: The Transformation of Microfinance in Latin America

January, 2001     Robert Peck Christen

Bob Christen examines the impact of commercialization and increased competition on the strategy and performance of MFIs in Latin America, with particular focus on "mission drift"-- whether or not commercialization drives microfinance institutions to deviate from their original missions. Drawing on an analysis of 205 Latin American MFIs, the paper describes the state of the industry in the region, the rapid changes it has undergone over time, and the challenges it now faces. It evaluates the profitability of Latin American microfinance and the impact of, as well as the responses to, competition.