Microfinance interest prices : a market approach

Abstract EN

In 1970's microfinance rose as a significant tool to help the poor to establish income-generating business with a promise to snatch millions away from poverty, “a lot of water has flowed under the bridge since then and microfinance became a debatable issue that having enthusiastic supporters and bitter critics.

Yet high prices applied to the clients against their loans represent the most important criticism even it is usually stemmed of the comparison with the prices apply by the commercial banks and neglecting the comparison with any other financing alternatives the poor might seek to have. 
It is widely claimed that microfinance institutions charge their clients a high pricing albeit there is no clear standard on which to determine whether it really high or not based on the full spectrum of the financial solutions available in a given country or society.

Almost of such claims always depending on the banking sector prices as a benchmark for comparing to conclude that microfinance which intended invented and introduced to help poor charging them a cost exceeds what the banks afford for their clients.

For the first sight this might consider unfair and unjust for the poor but this stemmed from an emotional perspective doesn't indeed reflect the fact that microfinance industry invested a lot in serving the poor even in many cases without having the feasible return.