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PurposeExamining multilevel effects of financial and social performance of microfinance institutions (MFIs), the authors aim to investigate microfinance mission drift from the trend effect. The authors also seek to move the literature forward by decomposing the performance variance at different levels and examining whether and how much each level of analysis matters.Design/methodology/approachGrowth curve modeling and variance decomposition analysis were conducted using a dataset consisting of 17,953 observations of 2,902 microfinance institutions in 122 countries from 1999 to 2017.FindingsThe study's result shows no evidence of mission drift in the microfinance industry. While MFIs improve their economic returns, they also increase the depth of outreach. In addition, firm-level heterogeneity is the dominant effect which explains 44% of the variance in microfinance financial performance (ROA) and 39% of the variance in social performance (Depth of outreach). The country-level is more critical in explaining financial performance (ROA) than social performance (Depth of outreach), accounting for 11 and 32% of the total variance, respectively. In particular, the interplay between the country-level and organizational-category level accounts for 9 and 11% of the total variance in financial performance (ROA) and social performance (Depth of outreach), respectively.Originality/valueThis study's multilevel analysis of microfinance performances moves the literature forward by responding to the debate on microfinance mission drift and providing a comprehensive overview of both social and financial performance. By focusing on the trend effect, the result of our models shows that MFIs improve both financial and social performance to fulfill dual missions. The microfinance business model becomes sustainable over time. The study's results of country effect and its interaction effect with different organizational categories reveal the prominence of a good policy design on MFI's mission fulfillment.