Lower the interest burden for microfinance
Conference Publication ResearchOnline@JCUAbstract
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.
Journal
N/A
Publication Name
Proceedings of the International Conference on Managing the Asian Century
Volume
N/A
ISBN/ISSN
978-981-4560-61-0
Edition
N/A
Issue
N/A
Pages Count
7
Location
Singapore
Publisher
Springer
Publisher Url
N/A
Publisher Location
Singapore
Publish Date
N/A
Url
N/A
Date
N/A
EISSN
N/A
DOI
10.1007/978-981-4560-61-0_21