Abstract
We describe the competitive environment of microcredit markets globally and we study the effects of competition on loan rates of microfinance institutions (MFIs). We use a new database from rating agencies, covering 379 for-profit and nonprofit MFIs in 67 countries over 2002–2008. Controlling for interest rate ceilings and other country-specific factors, we first find that nonprofits are relatively insensitive to industry-wide concentration changes, while for-profits charge significantly lower rates in less concentrated markets. Second, we find spillover effects between the for-profit and non-profit segments. Third, we show that the effects of concentration are consistent with an information dispersion mechanism.
Original language | English |
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Pages (from-to) | 893-937 |
Number of pages | 45 |
Journal | Journal of Money, Credit and Banking |
Volume | 50 |
Issue number | 5 |
Early online date | 23 May 2018 |
DOIs | |
Publication status | Published - Aug 2018 |
Keywords
- loan rates
- bank competition
- microfinance
- information dispersion
- nonprofit institutions