Interest rate caps may generate adverse effects for microfinance institutions and their clients. Interest rate caps imposed in competitive and highly saturated markets may favor the commercial mindset of microfinance institutions to the detriment of social outreach. In Cambodia, the recent interest rate cap has likely not contributed to protecting the poor, slowing down the market, or reducing the risk of over‐indebtedness. Policymakers and regulators should consider market conditions, especially the degree of competition when making regulatory decisions that may substantially affect the microfinance industry.

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A close relationship between microfinance loan officers and their clients is essential to avoid the phenomenon of client dropout. Client retention has been identified as a critical factor for both the social performance and the financial sustainability of microfinance institutions. Relationship lending in microfinance decreases the probability of clients dropping out, showing the importance of close contacts between loan officers and their clients. We recommend that microfinance practitioners avoid the rotation of loan officers through different branches when the risk of fraud from loan officers is low.

Even in double‐bottom‐line‐microfinance institutions, loan officers are not all prosocially motivated but rather are motivated by working conditions and promotions, highlighting the complexity of human resource management in hybrid organizations.

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