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David Roodman's Microfinance Open Book Blog


Working on chapter 7 now, I just updated and refined this graph showing the distribution of microcredit interest rates by region. It is my attempt to convey the kind of information in Figure 1 of this report by Richard Rosenberg, Adrian Gonzalez, and Sushma Narain. The basis for the figure is the gross portfolio yield data series from the Mix Market, which is just the amount of interest an MFI received during the year divided by its average outstanding loan stock---a rough but ready proxy for the interest rate. I've adjusted the figures upward by adjusting in an approximate way for loan losses, which reduce gross portfolio yield below the true interest rate. But I've adjusted them downward by subtracting inflation. I have not weighted MFIs by number of borrowers (the graphs look funny when I do), so big and little ones count the same.

I have not adjusted for compounding, compulsory savings, overpriced credit-life insurance, or value-added tax. See my post on Compartamos's interest rate for more on these factors. Here, Compartamos comes in at 76%/year above inflation.

I tried my Tuftesqe best to make the presentation clean and informative. Comments welcome on the substance and presentation.

Counts of MFIs by region and interest rate, adjusted for inflation but not compounding, 2009

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