The relationship between default on loans and operating costs in microfinance institutions

2016

Master's thesis Business Administration BE501 - University of Agder 2016 One of the challenges in microfinance is to solve asymmetric information and cost concerns related to serving poor customers with little or no collateral, in order to offer poor people and small businesses access to financial services. In resent times the industry has been critiqued for maintaining harsh collection practices and charging too high interest rates to their clients. The microfinance mission of serving the poor has been questioned from several holds. There are sufficient previous studies that show that the interest rate to a great extent is driven by the operating costs in the institutions. Identifying the …