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Displaying all posts under the topic of Interest Rates
My last two posts on the potential repayment crisis in Chiapas described the high risk of a crisis in Chiapas, Mexico, and its potentially devastating consequences to the microfinance sector around the world. But here is the good news: thus far there is no crisis, and one could still be avoided.
May 17, 2013
Impact Evaluation of Compartamos Released
The long-awaited impact study of Compartamos, led by Manuela Angelucci of the University of Michigan and Dean Karlan and Johnathan Zinman of IPA, has finally been published. The research team used a randomized trial to test the impact of loans offered at 110% APR by Compartamos, the largest microlender in Mexico.
April 17, 2013
In Conversation with Economist Rohini Pande
Timothy Ogden and Economist Rohini Pande discuss how standard microcredit may undermine business investment in this FAI Video interview.
Transcript of the Conversation
March 27, 2013
Worse than AP: The Damage of a Repayment Crisis in Chiapas
A month ago I wrote a post singling out the Mexican state of Chiapas as a potential site of a coming repayment crisis. No, this is not a follow-up announcing that it has begun, nor am I rooting for one to start. In my next post, I will review the options that the Mexican microfinance sector has to avoid it, and what the global microfinance community can do to help.
November 16, 2012
From Responsible Lending to Responsible Profit
If there’s one issue that’s most difficult for microfinance practitioners to explain to the lay public, it’s high interest rates. As Elisabeth Rhyne describes it, at some point the numbers get so high that people become outraged and stop listening altogether. Most recently, the issue was put back in the public eye through Hugh Sinclair’s Confessions of a Microfinance...
October 2, 2012
Highlights of David Roodman's Microfinance Open Book Blog
David Roodman’s conversation with Jonathan Morduch is coming up tomorrow. If you haven’t read David’s book yet, you should. But we can be realists. You probably don’t have time to buy and read the whole book in the next 36 hours. So, here’s a quick cheat sheet of some highlights from David’s blog over the past few years. Reading these posts will get you up to speed (but you should still read the book!).
September 14, 2012
Managing the Difficult Trade-offs in Microfinance Regulation
A few weeks ago M-CRIL, an Indian microfinance ratings firm, published a white paper on India's evolving microfinance regulations. The overall message is that while the proposed regulatory framework is improving, it still needs work. One particular point caught my eye:
August 11, 2011
Should interest rates be month-ized?
The idea behind APR – annualized percentage rates – is to put different interest rates into comparable terms. Some loans are for 2 months, say, and some for 2 years, so to compare them, it can be helpful to ask: “what would the rate be if the loan was for a year?”
Comparing apples to apples makes sense. Or at least that’s the financial industry/expert consensus.
November 30, 2010
Help microfinance, don't kill it
In a recent Indian Express op-ed, leading microfinance experts (including our own Dean Karlan) weighed in on the developing microfinance crisis in Andhra Pradesh. The crisis, sparked by a spate of suicides by microfinance customers, in response to alleged harassment by microfinance loan collectors and extremely high interest rates, now threatens the viability of the entire microfinance sector not only in AP, but in India as a whole.
October 28, 2010
From Highs to Lows - An Indian Crisis Unfolds Rapidly
India is the biggest, fastest-growing microfinance market anywhere. And it's at risk of hitting a bad crisis. This will be surprising if you haven't been paying attention to the global press for the past 3 weeks. The last big microfinance news from India centered on the millions of dollars earned by investors following the SKS IPO.