Interest Rate Restrictions and Microfinance: Insights from Cambodia

Interest Rate Restrictions and Microfinance: Insights from Cambodia

T. Caballero-Montes, C. Godfroid, M. Labie (Université de Mons – CERMi)

Interest rate restrictions have often been set in financial inclusion schemes. Yet, such regulations may present drawbacks affecting both microfinance institutions and their clients. This note presents a case study carried out in Cambodia, where an interest rate cap has recently been set. Beside the insights directly related to the case, theoretical conclusions are drawn to help regulators better understand what to consider when seeking to intervene in a microfinance market.