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Volume 39, Number 4, December 2000 >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/54233
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| Title: | The effects of the interest rate ceilings on the micro lending market in South Africa |
| Authors: | Mohane, Happy
Coetzee, Gerhard K.
Grant, William |
| Issue Date: | 2000-12 |
| Abstract: | Interest rates are a topical subject in the micro lending industry in South Africa. The micro
lending industry has been accused of charging usurious interest and exploiting the
consumers. This has led to the Department of Trade and Industry passing a Usury Act with
an aim of protecting the consumers. The Act imposes interest rate ceilings on loan finance
provided by money lending institutions. These ceilings are proposed to be linked to the prime
rate. Given this, it is not possible for micro lenders to charge full-cost recovery interest rates.
This paper tries to highlight the effects of interest rate ceilings on the micro finance market. It
argues that the biggest cost component of microlenders is administration costs and not the
cost of capital, thus linking ceilings to the prime rate is illogic. |
| URI: | http://purl.umn.edu/54233 |
| Institution/Association: | Agrekon>Volume 39, Issue 4, December 2000 |
| Total Pages: | 9 |
| From Page: | 730 |
| To Page: | 738 |
| Collections: | Volume 39, Number 4, December 2000
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| 27 _54_ Mohane, Coetzee and Grant Dec 2000.pdf | | 118Kb | PDF | View/Open |
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