EconPapers    
Economics at your fingertips  
 

Microcredit Capital Flows and Interest Rates: An Alternative Explanation

Arvind Ashta ()

Journal of Economic Issues, 2009, vol. 43, issue 3, 661-684

Abstract: International capital flows are constrained by a lack of complementary human capital, information asymmetries and transaction costs for small loan sizes. Extant research has provided a myriad of economic and cultural explanations of how microcredit has overcome these. Based on these, the paper develops a simple economic framework that accounts for these behavioral and institutional factors: a discontinuous marginal revenue curve and a U-shaped supply curve of capital for the microcredit environment. It then uses these analytical tools to explain capital flows and interest rates charged by traditional moneylenders. Finally, it uses these tools to present the growth of microcredit and the increase in financial flows and to explain why microcredit interest rates are lower than those of moneylenders, but higher than those of commercial banks to wealthier borrowers.

Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.2753/JEI0021-3624430305 (text/html)
Access to full text is restricted to subscribers.

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:mes:jeciss:v:43:y:2009:i:3:p:661-684

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MJEI20

DOI: 10.2753/JEI0021-3624430305

Access Statistics for this article

More articles in Journal of Economic Issues from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().

 
Page updated 2021-04-26
Handle: RePEc:mes:jeciss:v:43:y:2009:i:3:p:661-684