Responsible Pricing: The State of the Practice
By Larry Reed - Published: 2010
This paper investigates the main approaches to defining and/or achieving responsible pricing, including RoE limitations, interest caps, comparative transparency, and promoting competition. Prices are influenced by a wide range of factors such as country context, loan size, profit levels, efficiency and outreach, all of which must be taken into account before determining whether an MFI prices responsibly. One thing is clear, however. A comparative transparency approach – providing full information about institutions in their own market context – can allow observers to apply their own judgments. While not setting a standard per se, comparative transparency can pave the way to benchmark practitioners according to relevant dimensions and spotlight those who appear out of line.
