Are Microcredit Interest Rates Excessive?

Are Microcredit Interest Rates Excessive?

Over the past two decades, institutions that make micro loans to low-income borrowers in developing and transition economies have focused increasingly on making their operations financially sustainable by charging interest rates that are high enoug...

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Bibliographic Details
Main Authors: Rosenberg, Richard, Gonzalez, Adrian, Narain, Sushma
Format: Brief
Language:English
Published: World Bank, Washington, DC 2012
Subjects:
ACCESS TO FINANCIAL SERVICES
ADMINISTRATIVE COST
ADMINISTRATIVE COSTS
ANNUAL RETURN
BANK INTEREST RATES
BANK LENDING
BANK LOANS
BANK RATES
BANKS
BORROWER
COMMERCIAL BANKS
COMPETITIVE MARKETS
CONSUMER
COST OF FUNDS
CREDIT CARD
CREDIT CARD RATES
CREDIT OPTIONS
CREDIT UNION
CREDIT UNIONS
DEFAULT RATES
DEPOSIT
DEPOSITS
ECONOMIES OF SCALE
EXPLOITATION
FINANCIAL SUSTAINABILITY
HIGH INTEREST RATES
INFORMAL LENDERS
INTEREST CHARGE
INTEREST CHARGES
INTEREST INCOME
INTEREST RATE
INTEREST RATE CAPS
INTEREST RATE LEVELS
INTEREST RATES
LEARNING CURVE
LOAN
LOAN PORTFOLIO
LOAN SIZES
LOW-INCOME
LOW-INCOME BORROWERS
LOWER INTEREST RATES
MFI
MFIS
MICROCREDIT
MICROFINANCE
MICROFINANCE INSTITUTIONS
MICROLOAN
MONEYLENDERS
OPERATING COSTS
OUTREACH
POOR BORROWERS
PRIVATE INVESTORS
PUBLIC OFFERING
RETURN
RETURNS
RETURNS ON EQUITY
SALARIES
SAVINGS
SAVINGS SERVICES
SHAREHOLDER
SHAREHOLDERS
TAX
TRANSITION ECONOMIES
VALUABLE
WEB SITE
Online Access:http://documents.worldbank.org/curated/en/2009/02/10399236/microcredit-interest-rates-excessive
http://hdl.handle.net/10986/9498
Description
Summary:Over the past two decades, institutions that make micro loans to low-income borrowers in developing and transition economies have focused increasingly on making their operations financially sustainable by charging interest rates that are high enough to cover all their costs. They argue that doing so will best ensure the permanence and expansion of the services they provide. Sustainable (i.e., profitable) microfinance providers can continue to serve their clients without needing ongoing infusions of subsidies, and can fund exponential growth of services for new clients by tapping commercial sources, including deposits from the public.

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