Problem
1. Explain why NGOs charge borrowers higher interest rates, on average, relative to commercial microfinance banks. Under what conditions would it be a bad thing? How might such high interest rates be reduced-and with what costs and benefits?
2. Consider some of the interest rate issues emphasized in this chapter. What are some potential reasons why it is difficult for a microfinance institution to simply increase its interest rates in order to reach financial sustainability? Can you think of any creative solutions to this prevalent challenge?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.