Microfinance Interest Rates and Client Returns.

The interest rates of microfinance institutions ( MFIs) are widely criticized, although they are lower than those of many short-term lenders in 'developed' countries. The criticisms are not usually related to the returns on micro-investments. Little data is available, but earnings from farming seem generally to be below or little above the interest charged for microcredit. Returns from petty trade, a more frequent use of such credit, are well over the price that micro-borrowers pay for their loans. Microfinance is not a replacement for subsidized farm credit; farming is subsidized, everywhere, and efforts should be made to improve and revive the provision of low-cost agricultural finance. [ABSTRACT FROM AUTHOR]