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3 unusual facts about Interest rate cap and floor


Interest rate cap and floor

The overheads, and in particular the processing costs can drive the price differential between larger loans from banks and smaller loans from MFIs.

Banks and commercial MFIs with shareholders to satisfy are under greater pressure to make profits than NGO or not-for-profit MFIs.

However, interest rate controls are most often found at the lower end of the market where financial institutions (usually MFIs) use the information asymmetry to justify high lending rates.



see also