Competition, Loan Rates and Information Dispersion in Microcredit Markets

Andréas Heinen, M. Hamadi () and Guillermo Baquero

Working Paper CRENoS from Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia

Abstract: We describe the competitive environment of microcredit markets globally and we study the effects of competition on loan rates of microfinance institutions (MFIs). We use a new database from rating agencies, covering 379 for-profit and nonprofit MFIs in 67 countries over 2002-2008. First, we find that nonprofits are relatively insensitive to concentration changes, while for-profits charge significantly lower rates in less concentrated markets. We control for interest rate ceilings and other country-specific factors. Second, we find competitive pressures on nonprofits from increased for-profit market share. Third, we show that the effects of concentration are consistent with an information dispersion mechanism.

Keywords: nonprofit institutions; microfinance; Loan rates; information dispersion; bank competition (search for similar items in EconPapers)
JEL-codes: D4 G21 L1 O1 (search for similar items in EconPapers)
Date: 2013
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Related works:
Working Paper: Competition, loan rates and information dispersion in microcredit markets (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cns:cnscwp:201314

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