Fair Microfinance Loan Rates

Robert Jarrow () and Philip Protter

International Review of Finance, 2019, vol. 19, issue 4, 909-918

Abstract: This paper uses a reduced form credit risk model to determine fair lending rates for microfinance loans. A fair lending rate is defined to be that rate which makes the loan have a net present value of zero to the lender, after the inclusion of the lender's costs of issuing and monitoring the loan.

Date: 2019
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