Exposing Interest Rates: Their True Significance for Microentrepreneurs and Credit Programs
By Carlos Castello, Katherine Stearns and Robert Peck Christen - Published: July 1991
This document analyzes the impact of interest rates on microentrepreneurs and on credit programs. Experiences of institutions in Chile, Colombia and the Dominican Republic prove that efficient microenterprise programs can charge interest rates that reflect the cost of lending and foster self-sufficiency, without impeding the borrowers' ability to increase incomes and profits. This paper also explores the shift in interest rate policy from subsidized credit by MFIs to higher, unsubsidized rates of interest.
