tag:blogger.com,1999:blog-5043138489010794057.post8489098412916172958..comments2024-03-27T15:57:09.192+05:30Comments on Urbanomics: Analyzing interest caps on MFIsUrbanomicshttp://www.blogger.com/profile/16956198290294771298noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5043138489010794057.post-87679734711835755652010-10-21T08:29:15.514+05:302010-10-21T08:29:15.514+05:30thanks Mr Swarup.
Qe is the number of people who ...thanks Mr Swarup. <br />Qe is the number of people who borrow at the eqbm (intersection of S-D curve)<br />Qd is the number who are willing to borrow if the rate is capped at Rc (intersection of D and interest cap line)<br />Qs is the number of people who will be able to borrow when the rates are Rc (since lenders are willing to supply to only Qs people) (intersection of S-curve with interest cap line)<br /><br />The shaded regions represent the numbers of the borrowers and their respective interest rates. Say, Region III represents those willing to borrow only when the rates are between Rc and Re. <br /><br />the critical thing here is about which Qs borrowers are likely to end up being given loans since Qd borrowers are willing to take the loan when the rate is Rc. <br /><br />my arguement is that, <br /><br />1. since the lenders have a large pool of potential borrowers to choose from they will prefer those with the best credit-history and least risk and lend them.<br /><br />2. further, the lower rate lenders (MFIs lending at lower rates) are also those likely to have higher standards of due-diligence (this in turn reduces their transaction costs and lowers their enforcement costs). this in turn reinforces the earlier point. <br /><br />hope this clears up your doubts<br />thanksUrbanomicshttps://www.blogger.com/profile/16956198290294771298noreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-72675352885301792652010-10-20T11:30:22.426+05:302010-10-20T11:30:22.426+05:30The MFI came into life because of two reasons. One...The MFI came into life because of two reasons. One Govt/PSU banks inability give loans to them. Another reason is MFI joins hands with local community to ensure efficient use of money and expertise.<br /><br /> Instead of fixing the flaw, govt just blocking a nice innovation.Jayanhttps://www.blogger.com/profile/05701160771428326179noreply@blogger.comtag:blogger.com,1999:blog-5043138489010794057.post-20930691453640377282010-10-20T09:25:35.336+05:302010-10-20T09:25:35.336+05:30Will it be pssible to explain a bit about the line...Will it be pssible to explain a bit about the lines in the diagram and where it is coming from? Thanks.<br />Swarupgaddeswaruphttps://www.blogger.com/profile/16509075029154476375noreply@blogger.com