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

id	okr-10986-9498
recordtype	oai_dc
spelling	okr-10986-94982021-04-23T14:02:45Z Are Microcredit Interest Rates Excessive? Rosenberg, Richard Gonzalez, Adrian Narain, Sushma 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 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. 2012-08-13T08:46:23Z 2012-08-13T08:46:23Z 2009-02 http://documents.worldbank.org/curated/en/2009/02/10399236/microcredit-interest-rates-excessive http://hdl.handle.net/10986/9498 English CGAP Brief CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Brief Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	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
spellingShingle	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 Rosenberg, Richard Gonzalez, Adrian Narain, Sushma Are Microcredit Interest Rates Excessive?
relation	CGAP Brief
description	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.
format	Publications & Research :: Brief
author	Rosenberg, Richard Gonzalez, Adrian Narain, Sushma
author_facet	Rosenberg, Richard Gonzalez, Adrian Narain, Sushma
author_sort	Rosenberg, Richard
title	Are Microcredit Interest Rates Excessive?
title_short	Are Microcredit Interest Rates Excessive?
title_full	Are Microcredit Interest Rates Excessive?
title_fullStr	Are Microcredit Interest Rates Excessive?
title_full_unstemmed	Are Microcredit Interest Rates Excessive?
title_sort	are microcredit interest rates excessive?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2009/02/10399236/microcredit-interest-rates-excessive http://hdl.handle.net/10986/9498
_version_	1764409578177429504

Are Microcredit Interest Rates Excessive?

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