Lower the Interest Burden for Microfinance

Carrie Lui (), Insu Song () and John Vong ()
Additional contact information
Carrie Lui: James Cook University, Cairns Campus
Insu Song: James Cook University, Singapore Campus
John Vong: James Cook University, Singapore Campus

Chapter 21 in Proceedings of the International Conference on Managing the Asian Century, 2013, pp 185-191 from Springer

Abstract: Abstract MFIs have a high interest rate burden due to the small amount per transaction of microcredit and inevitably high operating cost per transaction. To ensure financial viability and to expand the depth and breadth of their operations, MFIs have to adopt cost recovery interest rates on microcredit, hence, MFIs have to charge interest rate high enough, usually substantially higher than the bank loan risk free interest rate. The major factors determining the interest rate on microcredit are the cost of funds, operating costs, loan loss cost and capital for business expansion. To illustrate the impacts of the above factors on interest rate, we present a summary of the current cost structures of microfinance institutes (MFIs) in three Southeast Asia countries, Cambodia, Vietnam, and Indonesia. Then, we review existing studies for the roles of mobile technologies for lowering the interest burden.

Keywords: Microfinance; Mobile technologies; Interest burden (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:sprchp:978-981-4560-61-0_21

Ordering information: This item can be ordered from
http://www.springer.com/9789814560610

DOI: 10.1007/978-981-4560-61-0_21

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().