Interest Rate Caps around the World : Still Popular, but a Blunt Instrument

Maimbo, Samuel Munzele ; Henriquez Gallegos, Claudia Alejandra

World Bank Group, Washington, DC

关键词: ACCESS TO CREDIT;    ACCESS TO FINANCE;    ACCOUNTING;    ADMINISTRATIVE FEES;    ADVISORY SERVICES;   

DOI  :  10.1596/1813-9450-7070
RP-ID  :  WPS7070

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Among other common forms of governmentfinancial control, caps on interest rates have beendeclining over the past several decades as mostindustrialized countries and a rising number of developingcountries continue liberalizing their financial policies.However, in several countries the last financial crisisreopened the debate on interest rate controls as a tool forconsumer protection. This paper undertakes a stock-takingexercise to determine the number of countries currentlycapping interest rates on loans. The paper looks at the maincharacteristics of the regimes countries have used,including the source of rate-setting authority, themethodology, and the criteria for establishing the cap. Thepaper finds at least 76 countries around the world currentlyuse some form of interest rate caps on loans -- all withvarying degrees of effects, including the withdrawal offinancial institutions from the poor or from specificsegments of the market, an increase in the total cost of theloan through additional fees and commissions, among others.The paper concludes that there are more effective ways ofreducing interest rates on loans over the long run and ofimproving access to finance: measures that enhancecompetition and product innovation, improve financialconsumer protection frameworks, increase financial literacy,promote credit bureaus, enforce disclosure of interestrates, and promote microcredit products. Such measuresshould be implemented in an integrated manner. However, ifcaps are still considered a useful policy tool for reducinginterest rates on loans and increasing access to finance,they should be implemented in accord with the caveatsdescribed in the paper.