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 |
|---|---|
| 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
Access to Document
- Guillermo_Baquero_et_al_Competition,_loan_rates,_and_information_dispersion_in_nonprofit_and_for-profit_microcredit_markets_Journal_of_Money,_Credit_and_Banking_2017
Checked for eligibility: 09/05/2019 This is the peer reviewed version of the following article: BAQUERO, G. , HAMADI, M. and HEINEN, A. (2018), Competition, Loan Rates, and Information Dispersion in Nonprofit and For‐Profit Microcredit Markets. Journal of Money, Credit and Banking, 50: 893-937., which has been published in final form at: https://doi.org/10.1111/jmcb.12472. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.