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2019-11-06 - Colloque/Présentation - communication orale - Anglais - 29 page(s) (Soumise)

Caballero-Montes Tristan , "Cooling Down an Overheating Microfinance Market: Are Interest Rate Caps Relevant?" in 2nd CERMi-CERSEM PhD Candidates-Supervisors Workshop, Université de Mons, Mons, Belgique, 2019

  • Codes CREF : Economie des PVD (DI4375)
  • Instituts UMONS : Institut de Recherche en Développement Humain et des Organisations (HumanOrg)
  • Centres UMONS : Microfinance (CERMI)

Abstract(s) :

(Anglais) Market saturation has become a reality in microfinance and has resulted in a series of undesirable consequences. Overheating microfinance markets are especially characterized by unhealthy market competition, harsh lending practices, risk of clients’ over-indebtedness, and mission drift. To address these issues, more and more governments have considered imposing caps on interest rates as a relevant means to slow down microcredit markets. Is it a good idea to cap interest rates in microfinance, though? In the affirmative, how should it be implemented? In this paper, we rely on a qualitative case study to examine the consequences of an interest rate cap imposed in 2017 in the Cambodian microcredit market, a market characterized by intense competition and relatively low interest rates. First, we show that caps may cause adverse effects and be irrelevant for cooling down an overheating microfinance market. We then propose a theoretical framework to help decide in what situations an intervention in interest rates is justified or not, and we apply this framework to a series of countries.


Mots-clés :
  • (Anglais) Market saturation
  • (Anglais) Microfinance
  • (Anglais) Competition
  • (Anglais) Cambodia
  • (Anglais) Interest rate cap