Interest rates in community-managed microfinance: How the poorest Africans earn sixty percent return on their savings
Ole Rasmussen (odrasmussen@gmail.com)
No 9/2012, Discussion Papers on Economics from University of Southern Denmark, Department of Economics
Abstract:
It is common to see the interest rate on savings in community-managed microfinance being reported as "20-30% annually". Using panel data from 204 groups in Malawi, I show that the right figure is likely to be at least twice this figure. This is due to sector-wide application of non-standard interest rate calculation and unrealistic assumptions about the savings profile in the groups. In the 204 groups, the annual interest rate on savings is 63%. For transparency and accountability donors, politicians and practitioners should change their interest rate calculations. Furthermore, the proposal method will allow practitioners to better monitor group performance.
Keywords: Microfinance; interest rates; performance monitoring; community-managed microfinance; village savings and loan associations; Malawi; NGO (search for similar items in EconPapers)
JEL-codes: G21 M40 O16 Q13 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2012-03-29
New Economics Papers: this item is included in nep-afr, nep-ban and nep-mfd
References: View complete reference list from CitEc
Citations:
Downloads: (external link)
https://www.sdu.dk/-/media/files/om_sdu/institutte ... _2012/dpbe9_2012.pdf Full text (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:hhs:sdueko:2012_009
Access Statistics for this paper
More papers in Discussion Papers on Economics from University of Southern Denmark, Department of Economics Department of Economics, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Astrid Holm Nielsen (astni@sam.sdu.dk).