Why are microcredit interest rates so high?
The nature of microcredit small loans is such that interest rates need to be high to return the cost of the loan (CGAP). What are the effects of microfinance? NCDF’s vision of inclusive finance is focused on assuring that each of the Least Developed Countries where UNCDF works has a continuum of financial institutions that together offer appropriate financial products and services to all segments of the population. This must be supported by sound policy, legal and regulatory frameworks and is characterized by: Access at a reasonable cost of all households and enterprises to a broad range of financial services including savings, short and long-term credit, leasing and factoring, mortgages, insurance, pensions, payments, local money transfers and international remittances; Sound institutions guided by appropriate internal management systems, industry performance standards, performance monitoring, institutional transparency, accountability and sound prudential regulation; Financial and in
