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    Understanding and Dealing with High Interest Rates on Microcredit: A Note to Policy Makers in the Asia and Pacific Region

    Fernando, Nimal A. | May 2006
    Abstract
    Charging prices high enough to cover costs is essential for any business to survive in the marketplace. This is true for institutions providing microfinance services as it is for any other enterprise. Thus, it is not surprising that many successful microfinance institutions charge high interest rates to cover their high costs. However, despite the success of those institutions in expanding the supply of credit during the last 2 decades to an increasing number of poor and low-income households, some countries in the region seem to be moving to impose ceilings on microcredit interest rates. This paper discusses why such moves are likely to hurt the poor. And the paper points toward a number of positive measures that policy makers could consider to bring down the high microcredit interest rates without hurting the industry and its clients.
    Citation
    Fernando, Nimal A.. 2006. Understanding and Dealing with High Interest Rates on Microcredit: A Note to Policy Makers in the Asia and Pacific Region. © Asian Development Bank. http://hdl.handle.net/11540/5491.
    Keywords
    Development
    Finance
    Development Challenges
    Development Issues
    Development Problems
    Microenterprises Finance
    Commercial Finance Companies
    Enterprise Financing
    Financial Analysis
    Banking Finance And Investment
    Microfinance Programs
    Microfinance Institution
    Microenterprises Finance
    ADB
    Project finance
    Development plans
    Strategic planning
    Business Financing
    Investment Requirements
    Insurance Companies
    International Monetary Relations
    International Financial Market
    Exchange Rate
    Microcredit
    Insurers
    Insurance stocks
    Insurance holding companies
    Insurance carriers
    Insurance agencies
    Business subsidies
    Investment companies
    International banks and banking
    Stock exchanges
    Grants
    Loans
    Microloans
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    Citable URI
    http://hdl.handle.net/11540/5491
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    Author
    Fernando, Nimal A.
    Theme
    Development
    Finance
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise