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The new moneylenders : are the poor being exploited by high microcredit interest rates (English)

Over the past two decades, institutions that make micro loans to low-income borrowers in developing and transition economies have focused increasingly on making their lending operations financially sustainable by charging interest rates that are high enough to cover all their costs. They argue that doing so will best ensure the permanence and expansion of the services they provide. Sustainable (i.e., profitable) microfinance providers can continue to serve their clients without needing ongoing infusions of subsidies, and can fund exponential growth of services for new clients by tapping commercial sources, including deposits from the public. This paper asks whether micro credit rates are abusively high. Obviously there can be no one-size fits- all answer to this question, not only because there are huge variations in the interest rates and related circumstances of individual Micro-finance institutions (MFIs) around the world, but also because there is no agreed standard for what is abusive. There is an intense dispute about how high interest rates and profits would have to be to qualify as excessive, and indeed about whether terms like this have any useful meaning, at least in the arena of for-profit microfinance.

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

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    The World Region,

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    The new moneylenders : are the poor being exploited by high microcredit interest rates?

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

The new moneylenders : are the poor being exploited by high microcredit interest rates (English). CGAP Occasional paper ; no. 15 Washington, D.C. : World Bank Group.