Dear Microfinance practitioners and experts,
I wanted to have your opinions/views on the following:
1. Do MFIs take decision on fixing rate of interest on loans by using models like that of CGAP, which uses administrative expenses (AE), loan losses (LL), the cost of funds (CF), the desired capitalization rate (K), and investment income (II) in real world? As most of the practitioners would be aware, CGAP model states that sustainable rate of interest (R) can be calculated by using the formula indicated here:
AE + LL + CF + K - II
R=-------------------------------------
1 – LL
2. Are there empirical studies on use of CGAP's kinds of models in fixing rates of interest charged to the microfinance clients?
3. Do the huge differences in the above factors such as AE, CF, LL in different economies explain the difference in rate of interest charged in those economies?
It would be great to hear from you all.
Best regards,
KNS
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Posted by: "Kamakhya Nr. Singh" <kamy2n@yahoo.com>
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