Microcredit Interest Rates and Their Determinants: 2004–2011
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From the beginning of modern microcredit, its most controversial dimension has been the interest rates charged by microlenders—often referred to as microfinance institutions (MFIs). These rates are higher, often much higher, than normal bank rates, mainly because it inevitably costs more to lend and collect a given amount through thousands of tiny loans than to lend and collect the same amount in a few large loans.
KeywordsInterest Rate Operating Expense Loan Loss Loan Portfolio Funding Cost
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