Effects of Interest Rate Caps on Financial Inclusion

Juan Cubillos-Rocha, Luis Melo-Velandia, María José Roa-García (), Juliana Gamboa-Arbelaez, Sara Restrepo-Tamayo () and Mauricio Villamizar-Villegas
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María José Roa-García: CEMLA
Sara Restrepo-Tamayo: Banco de la República de Colombia
Authors registered in the RePEc Author Service: María José Roa García ()

Borradores de Economia from Banco de la Republica de Colombia

Abstract: In this paper we study the liberalization of the microcredit usury rate in Colombia and its effects on loan expansion. Namely, in February 2007 the interest rate ceiling for microcredit loans was lifted and fixed to 33%, while the ceiling of all other loans remained unchanged and close to 20%. We perform a Difference-in-Diffeence analysis by comparing the expansion of microcredit loans (treatment group) with that of corporate loans (control group). Additionally, we narrow in on similar levels of both loan size and debtor's risk in order to make microcredit and corporate portfolios more comparable. Our results indicate that this policy encouraged and facilitated financial access to entrepreneurs. Specifically, we find that, on average, the amount lent by credit establishments increased between 21:5% and 42:4%, and the number of new loans increased between 25:1% and 47:8%. **** RESUMEN: En este trabajo estudiamos la liberalización de la tasa de usura de la cartera de microcrédito en Colombia y sus efectos sobre la expansión del crédito. Concretamente, en febrero de 2007 la tasa de usura para la cartera de microcrédito se elevó y se fijó en 33%, mientras que la tasa de usura de las otras carteras se mantuvo cerca al 20%. Realizamos un análisis de Diferencias en Diferencias al comparar la expansión de los créditos de microcrédito (grupo de tratamiento) con la de los créditos comerciales (grupo de control). Adicionalmente, analizamos niveles similares tanto del tamaño del crédito como del riesgo del deudor, con el objetivo de que ambas carteras sean más comparables. Nuestros resultados indican que esta política estimuló y facilitó el acceso financiero a las pequeñas y medianas empresas. Específicamente, encontramos que, en promedio, el monto prestado por los establecimientos de crédito aumentó entre 21.5% y 42.4%, y el número de nuevos créditos aumentó entre 25.1% y 47.8%.

Keywords: Panel VAR models; bias correction; restricted OLS, Modelos Panel VAR; corrección de sesgo; MCO restringido, Tasa de usura, inclusión financiera, cartera microcrédito, cartera comercial. (search for similar items in EconPapers)
JEL-codes: C13 C33 C51 (search for similar items in EconPapers)
Pages: 46
Date: 2018-12
New Economics Papers: this item is included in nep-fle and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://doi.org/10.32468/be.1060 (application/pdf)

Related works:
Journal Article: Effects of interest rate caps on credit access (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:1060

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