Variations in Microcredit Interest Rates
Global differences in microcredit interest rates are dramatic. The global average is about 35 percent, but the average in Uzbekistan is above 80 percent, and in Sri Lanka it is around 17 percent. Small loan sizes are the most commonly cited reason...
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/07/9989321/variations-microcredit-interest-rates http://hdl.handle.net/10986/9510 |
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okr-10986-95102021-04-23T14:02:45Z Variations in Microcredit Interest Rates Kneiding, Christoph Rosenberg, Richard BANK RATES BRANCHES CGAP COST OF FUNDS DEVELOPMENT BANK ECONOMIC TRANSACTIONS EXPENSE RATIO FINANCIAL SECTOR INITIAL PUBLIC OFFERING INTEREST RATE INTEREST RATES LOAN BALANCE LOAN BALANCES LOAN PORTFOLIO LOAN SIZE LOAN SIZES LOCAL GOVERNMENT MARKET SHARE MFI MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MICROFINANCE MARKETS MICROFINANCE ORGANIZATIONS MICROFINANCE SECTOR MONEYLENDERS NATIONAL BANK NOMINAL INTEREST RATES NOMINAL YIELD POLITICAL CONSIDERATIONS PORTFOLIO PUBLIC POLICY REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS SMALL LOAN TRACK RECORD Global differences in microcredit interest rates are dramatic. The global average is about 35 percent, but the average in Uzbekistan is above 80 percent, and in Sri Lanka it is around 17 percent. Small loan sizes are the most commonly cited reason why microcredit rates are higher than normal bank rates. Microcredit is a "high-touch" business, and microfinance institutions (MFIs) have to process thousands of tiny transactions. Apparently, there is no single, simple explanation for the considerable inter-country differences in interest rates. In addition to small loan sizes, which undoubtedly are an important driver behind interest rates, other dynamics are at work. This current research has already started to address some fundamental questions: 1) how do borrowers comparably fare in low-interest and high-interest environments? 2) What is the effect of competition on MFIs' efficiency? Does more competition necessarily lead to lower interest rates? 3) How should public policy exert influence on the domestic microfinance sector? What are the features of an "appropriate" regulatory environment? 2012-08-13T08:49:36Z 2012-08-13T08:49:36Z 2008-07 http://documents.worldbank.org/curated/en/2008/07/9989321/variations-microcredit-interest-rates http://hdl.handle.net/10986/9510 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 |
BANK RATES BRANCHES CGAP COST OF FUNDS DEVELOPMENT BANK ECONOMIC TRANSACTIONS EXPENSE RATIO FINANCIAL SECTOR INITIAL PUBLIC OFFERING INTEREST RATE INTEREST RATES LOAN BALANCE LOAN BALANCES LOAN PORTFOLIO LOAN SIZE LOAN SIZES LOCAL GOVERNMENT MARKET SHARE MFI MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MICROFINANCE MARKETS MICROFINANCE ORGANIZATIONS MICROFINANCE SECTOR MONEYLENDERS NATIONAL BANK NOMINAL INTEREST RATES NOMINAL YIELD POLITICAL CONSIDERATIONS PORTFOLIO PUBLIC POLICY REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS SMALL LOAN TRACK RECORD |
| spellingShingle |
BANK RATES BRANCHES CGAP COST OF FUNDS DEVELOPMENT BANK ECONOMIC TRANSACTIONS EXPENSE RATIO FINANCIAL SECTOR INITIAL PUBLIC OFFERING INTEREST RATE INTEREST RATES LOAN BALANCE LOAN BALANCES LOAN PORTFOLIO LOAN SIZE LOAN SIZES LOCAL GOVERNMENT MARKET SHARE MFI MICROCREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MICROFINANCE MARKETS MICROFINANCE ORGANIZATIONS MICROFINANCE SECTOR MONEYLENDERS NATIONAL BANK NOMINAL INTEREST RATES NOMINAL YIELD POLITICAL CONSIDERATIONS PORTFOLIO PUBLIC POLICY REGULATORY ENVIRONMENT REGULATORY REQUIREMENTS SMALL LOAN TRACK RECORD Kneiding, Christoph Rosenberg, Richard Variations in Microcredit Interest Rates |
| relation |
CGAP brief |
| description |
Global differences in microcredit
interest rates are dramatic. The global average is about 35
percent, but the average in Uzbekistan is above 80 percent,
and in Sri Lanka it is around 17 percent. Small loan sizes
are the most commonly cited reason why microcredit rates are
higher than normal bank rates. Microcredit is a
"high-touch" business, and microfinance
institutions (MFIs) have to process thousands of tiny
transactions. Apparently, there is no single, simple
explanation for the considerable inter-country differences
in interest rates. In addition to small loan sizes, which
undoubtedly are an important driver behind interest rates,
other dynamics are at work. This current research has
already started to address some fundamental questions: 1)
how do borrowers comparably fare in low-interest and
high-interest environments? 2) What is the effect of
competition on MFIs' efficiency? Does more competition
necessarily lead to lower interest rates? 3) How should
public policy exert influence on the domestic microfinance
sector? What are the features of an "appropriate"
regulatory environment? |
| format |
Publications & Research :: Brief |
| author |
Kneiding, Christoph Rosenberg, Richard |
| author_facet |
Kneiding, Christoph Rosenberg, Richard |
| author_sort |
Kneiding, Christoph |
| title |
Variations in Microcredit Interest Rates |
| title_short |
Variations in Microcredit Interest Rates |
| title_full |
Variations in Microcredit Interest Rates |
| title_fullStr |
Variations in Microcredit Interest Rates |
| title_full_unstemmed |
Variations in Microcredit Interest Rates |
| title_sort |
variations in microcredit interest rates |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2008/07/9989321/variations-microcredit-interest-rates http://hdl.handle.net/10986/9510 |
| _version_ |
1764409623859691520 |