This paper examines the effects of increased competition among motivated MFIs, on borrower targeting. The paper models MFIs as motivated agents that maximize aggregate utility of borrowers.

Study findings indicate that implications of competition among motivated MFIs on borrower targeting depends in a subtle way on the interaction of several factors, namely the extent of inequality, the nature of technology and the possibility of double-dipping.

The paper concludes by briefly discussing robustness issues, such as mission drift and contagion, client-maximizing MFIs, MFIs that manipulate interest rates, competition with more elastic donor funds and generalizing the production function.