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Microfinance and Moneylender Interest Rate: Evidence from Bangladesh

Debdulal Mallick

MPRA Paper from University Library of Munich, Germany

Abstract: The linkage between the formal and informal credit markets has long been of great interest to development economists. This paper addresses one important aspect of the linkage by empirically investigating the impact of the microfinance program expansion on the moneylender interest rates in Bangladesh, and finds that moneylender interest rates increase with microfinance program expansion. MFI program expansion increases moneylender interest rates in the villages in which more loans are invested in productive economic activities than consumption. Borrowers resort to moneylenders for additional funds because of inadequate supply, unavailability of seasonal working capital from MFIs, and tight repayment schedule, which in turn increases demand for moneylender loans.

Keywords: Moneylender; microfinance; interest rate; informal sector. (search for similar items in EconPapers)
JEL-codes: C31 O12 O17 (search for similar items in EconPapers)
Date: 2009-05
New Economics Papers: this item is included in nep-dev and nep-mfd
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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Journal Article: Microfinance and Moneylender Interest Rate: Evidence from Bangladesh (2012) Downloads
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