Are Microcredit Interest Rates Excessive?

Rosenberg, Richard S.; Gonzalez, Adrian; Narain, Sushma

doi:10.2139/ssrn.1401476

Cited by 38 publications

(33 citation statements)

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“…Rosenberg (2002) has put forward the claim most sharply in a much-cited publication of the Consultative Group to Assist the Poor. Still, the idea gives the simplest defense of the claim that poor households can afford the high interest rates often charged by microfinance institutions.…”

Section: Returns To Capitalmentioning

confidence: 99%

Access to Finance

Karlan

Morduch

2010

Handbook of Development Economics

238

154

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Section: Returns To Capitalmentioning

confidence: 99%

Access to Finance

Karlan

Morduch

2010

Handbook of Development Economics

238

154

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“…MFIs need to charge rates that are higher than ordinary keeping money rates to take care of their expenses and keep the administration accessible. Anyway even these rates are far beneath what destitute routinely pay to town cash loan specialists and other casual sources, whose rate premium rates routinely climb into the hundreds and even the thousands [38]. A strong and prudential supervision may play a vital role in these unfair practices and pave way for economic growth.…”

Section: More Commonly Institutional Reforms Work As a Prerequisite Formentioning

confidence: 99%

http://www.omicsgroup.org/journals/egovernment-success-factors-views-of-saudiprofessionals-2169-026X-1000128.php?aid=48970

Aiman¹

2013

J Entrepren Organiz Manag

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Effects of Legal and Cultural Attachments on Microfinance Capital StructureUmme-E-Aiman* and Habib Ahmad Department of Finance and Financial Management, Foundation University, Rawalpindi, Pakistan transfers [1]". Many of those who promote microfinance generally believe that such access will help poor people out of poverty, including participants in the Microcredit Summit Campaign. This study aims to identify the impact of legal traditions, creditor rights and financial sector development on capital structure of MFIs. Literature ReviewThere are hardly few articles concerning the financing procedures and capital structure which focuses on the issue of creditors' rights, depositor protection and legal traditions and terms for microfinance institutions. Microfinance institutions cover an extensive range of funders that differ in terms of legal traditions, objectives, target market and approach style. CGAP research (2011) shows that despite of tensed budgets and worldwide financial crises, the levels of cross-border funding continued to increase, but at a much lower growth rate [4].Researchers have a grade contribution regarding the relation between finance and law and finance sector development. They found that when the outside investors are not adequately protected with the help of legal framework offered by a country in the result of which entrepreneurs and actual owners are forced to sustain big positions themselves to line up their incentives with other investors [5]. More clearly, countries with weak investor protection should have more intense ownership structures. Hubert Tchakoute Tchuigoua in his article of 2014 says that AbstractPurpose: The basic intention behind this article is to find that how legal bindings and financial developments sector influence the capital structure of micro finance institutions.Design/methodology/approach: Panel data of 87 countries is used in the analysis from 2004 to 2013 with annual frequency. Random effect is used after Hausman specification. Findings:Result shows that good and prudential legal tradition, may pave way for foreign investments by gaining trust and in this way economic development of country move towards progress. But one variable (depth of credit information) shows inverse relationship with leverage. This is because some time when MFIs fully disclose their financial structures and terms and conditions, they fail to get the investors' confidence because of gap between investors and MFIs interests.Originality/value: We found limited research work which has been carried out to answer the question that how capital structure respond to the legal traditions and geographical bindings of country.

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“…As a consequence, the broader term of microfinance , proposed in the late 1990s, encompasses a number of microfinance institutions (MFIs) with different orientation and objectives. Morduch (2000) called the divergence of opinion on subsidized microfinance and sustainability‐oriented microfinance (further espoused by Rosenberg, 2002) as the ‘microfinance schism’. This was followed by a series of papers in a book edited by Zeller and Meyer (2002) reminding us that the triangle of microfinance requires a balance among financial sustainability, outreach, and impact.…”

Section: Customer‐centered Approach: the Second Microfinance Revolutionmentioning

confidence: 99%