Abstract: MFIs' mission drift may be caused by regional difference. Our general understanding of Mission drift is that MFIs choose wealthy clients over poor ones. This paper analyzes the problem of Mission drift caused by the regional difference which is covered by the conventional mission drift. The regional difference of clients implies the difference of default risk of clients，which have been showed by existing studies. Simply put, clients in rural region have a high risk of default, clients in township region have a low risk of default. The differences of default risk is also reflected by clients’ repayment ability. The clients’ repayment ability is represented by clients’ income, lower income means lower repayment ability. From the perspective of the default risk, the differences of clients' regional and the differences of clients’ repayment ability are combined to study mission drift, thus the mission drift caused by regional differences is analyzed. The pro-poor MFIs with social purpose of poverty alleviation does not think about different of clients’ income, but considers the default risk of its clients. To avoid default risk, MFIs are choosing rural clients over rural ones, thus mission drift may be induced by avoiding the risk of default. In order to analyze this process, the following model is constructed in this paper: The first item on the right is the loan repayment function of township clients, the second is the loan repayment function of rural clients, and the third is the minimum loan repayment function required by MFIs. By this means, we analyzes the alternative choice of MFIs to customers. With the deepening of the alternative choice mechanism of MFIs, the credit amount of township customers is gradually increased, the credit dividend is also increased, and also their income, therefore the income gap with rural clients is widened. This will give us the illusion that MFIs were lending more to wealthy clients rather than township clients. In order to analyze this process, the following model is constructed in this paper: The first item on the right is the loan repayment function after the township clients enjoy the credit dividend, the second item is the loan repayment function after the rural clients do not enjoy the credit dividend, and the third item is the minimum loan repayment function required by the MFIs. Thus we analyzes the mission drift caused by the regional difference which is covered by the mission drift caused by income level. Empirical analysis is carried out based on the credit data from 2013 to 2015 year of The Association for Rural Development of Yi-long, Sichuan Province. Probit model is used to research whether pro-poor MFIs increases loans to township clients and reduces loans to rural clients, instead of increasing loans to high-income clients and reducing loans to low-income clients. Finally, FE model is employed to study whether the default risk would lead to mission drift. Based on the above analysis, this paper concludes that the MFIs with a social purpose of poverty alleviation which does not reduce the loan to the poor, but in order to avoid the risk of default, the MFIs reduces loans to rural clients in poor groups and increases loans to township clients in poor groups. Overall, it widens the income gap between rural clients and township clients who are also poor groups. In this case, the region differences of the clients cause mission drift.

Key words: mission drift, customers'region difference, default risk model, microfinance