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Presentation Title

The Economics of Microfinance: Market Structures & Interest Rates

Student Presenter(s) and Advisor

Rick Arko '15Follow

Location

Young 320

Abstract

Many who live on less than $2 per day receive access to banking services through NGOs. These extremely low incomes result in expensive large transaction costs for financial services. Recently, a shift has occurred from donor-funded microfinance to a sustainable for-profit model. This evolution is expanding banking services. Some find the rates charged on loans and profits to be predatory, however. Competitive environments influence loan rates, but, increased competition does not mean better service. When analyzed, microfinance interest rates are not predatory, and inclusive financial activities can result in economic sustainability and improved quality of life for those in poverty.

Presentation Type

Individual Presentation

Start Date

4-9-2013 10:00 AM

End Date

4-9-2013 10:20 AM

Panel

Panel: The Promise and Perils of Poverty Alleviation: Microfinance, Savings and Value Chains

Panel Moderator

Les Dlabay

Field of Study for Presentation

Economics

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Apr 9th, 10:00 AM Apr 9th, 10:20 AM

The Economics of Microfinance: Market Structures & Interest Rates

Young 320

Many who live on less than $2 per day receive access to banking services through NGOs. These extremely low incomes result in expensive large transaction costs for financial services. Recently, a shift has occurred from donor-funded microfinance to a sustainable for-profit model. This evolution is expanding banking services. Some find the rates charged on loans and profits to be predatory, however. Competitive environments influence loan rates, but, increased competition does not mean better service. When analyzed, microfinance interest rates are not predatory, and inclusive financial activities can result in economic sustainability and improved quality of life for those in poverty.