Lower the interest burden for microfinance

Lui, Carrie, Song, Insu, and Vong, John (2013) Lower the interest burden for microfinance. In: Proceedings of the International Conference on Managing the Asian Century. pp. 185-191. From: ICMAC 2013: International Conference on Managing the Asian Century, 11-13 July 2013, Singapore.

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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.

Item ID: 28685
Item Type: Conference Item (Research - E1)
ISBN: 978-981-4560-61-0
Keywords: microfinance, mobile technologies, interest burden
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Date Deposited: 27 Feb 2014 04:11
FoR Codes: 08 INFORMATION AND COMPUTING SCIENCES > 0805 Distributed Computing > 080502 Mobile Technologies @ 80%
08 INFORMATION AND COMPUTING SCIENCES > 0805 Distributed Computing > 080503 Networking and Communications @ 20%
SEO Codes: 89 INFORMATION AND COMMUNICATION SERVICES > 8998 Environmentally Sustainable Information and Communication Services > 899899 Environmentally Sustainable Information and Communication Services not elsewhere classified @ 100%
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