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

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dc.contributor.authorHenriquez Gallegos, Claudia Alejandra
dc.contributor.authorMaimbo, Samuel Munzele
dc.date.accessioned2014-10-30T19:53:52Z
dc.date.available2014-10-30T19:53:52Z
dc.date.issued2014-10
dc.description.abstractAmong other common forms of government financial control, caps on interest rates have been declining over the past several decades as most industrialized countries and a rising number of developing countries continue liberalizing their financial policies. However, in several countries the last financial crisis reopened the debate on interest rate controls as a tool for consumer protection. This paper undertakes a stock-taking exercise to determine the number of countries currently capping interest rates on loans. The paper looks at the main characteristics of the regimes countries have used, including the source of rate-setting authority, the methodology, and the criteria for establishing the cap. The paper finds at least 76 countries around the world currently use some form of interest rate caps on loans -- all with varying degrees of effects, including the withdrawal of financial institutions from the poor or from specific segments of the market, an increase in the total cost of the loan through additional fees and commissions, among others. The paper concludes that there are more effective ways of reducing interest rates on loans over the long run and of improving access to finance: measures that enhance competition and product innovation, improve financial consumer protection frameworks, increase financial literacy, promote credit bureaus, enforce disclosure of interest rates, and promote microcredit products. Such measures should be implemented in an integrated manner. However, if caps are still considered a useful policy tool for reducing interest rates on loans and increasing access to finance, they should be implemented in accord with the caveats described in the paper.en
dc.identifierhttp://documents.worldbank.org/curated/en/2014/10/20303403/interest-rate-caps-around-world-still-popular-blunt-instrument
dc.identifier.doi10.1596/1813-9450-7070
dc.identifier.urihttps://hdl.handle.net/10986/20494
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank Group, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 7070
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectACCESS TO CREDIT
dc.subjectACCESS TO FINANCE
dc.subjectACCOUNTING
dc.subjectADMINISTRATIVE FEES
dc.subjectADVISORY SERVICES
dc.subjectANNUAL INTEREST RATE
dc.subjectANNUAL INTEREST RATES
dc.subjectANNUAL PERCENTAGE RATE
dc.subjectAPR
dc.subjectAVAILABILITY OF CREDIT
dc.subjectAVERAGE INTEREST
dc.subjectAVERAGE INTEREST RATE
dc.subjectAVERAGE INTEREST RATES
dc.subjectBANK ACCOUNTS
dc.subjectBANK ASSET
dc.subjectBANK COMPETITION
dc.subjectBANK LENDING
dc.subjectBANK LOANS
dc.subjectBANKING SYSTEM
dc.subjectBANKS
dc.subjectBOND
dc.subjectBOND RATES
dc.subjectBORROWING
dc.subjectBUSINESS TRANSACTIONS
dc.subjectCOLLATERAL
dc.subjectCOMMERCIAL BANK
dc.subjectCOMMERCIAL BANKS
dc.subjectCOMMERCIAL CREDIT
dc.subjectCOMMERCIAL LENDING
dc.subjectCOMMERCIAL LOANS
dc.subjectCOMMERCIAL TRANSACTIONS
dc.subjectCONSUMER CREDIT
dc.subjectCONSUMER CREDITS
dc.subjectCONSUMER FINANCIAL LITERACY
dc.subjectCONSUMER LITERACY
dc.subjectCONSUMER LOANS
dc.subjectCONSUMER ORGANIZATIONS
dc.subjectCONSUMER PROTECTION
dc.subjectCONTRIBUTION
dc.subjectCOST OF CREDIT
dc.subjectCREDIT BUREAU
dc.subjectCREDIT BUREAUS
dc.subjectCREDIT CARD
dc.subjectCREDIT CARDS
dc.subjectCREDIT INFORMATION
dc.subjectCREDIT INFORMATION SYSTEMS
dc.subjectCREDIT INSTITUTIONS
dc.subjectCREDIT MARKET
dc.subjectCREDIT PROVIDER
dc.subjectCREDIT PROVIDERS
dc.subjectCREDIT TRANSACTIONS
dc.subjectCREDIT UNION
dc.subjectCREDIT UNIONS
dc.subjectCREDITOR
dc.subjectCREDITORS
dc.subjectCREDITS
dc.subjectCREDITWORTHINESS
dc.subjectCROP INSURANCE
dc.subjectCURRENCY
dc.subjectCURRENT ACCOUNT
dc.subjectCURRENT INTEREST RATE
dc.subjectDEBT
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT BANK
dc.subjectDEVELOPMENT BANKS
dc.subjectEDUCATED CONSUMER
dc.subjectEDUCATIONAL LEVEL
dc.subjectEMPLOYERS
dc.subjectEXCESSIVE INTEREST RATES
dc.subjectEXPLOITATION
dc.subjectFAIR TRADING
dc.subjectFARMERS
dc.subjectFINANCIAL ACCESS
dc.subjectFINANCIAL CONSUMER
dc.subjectFINANCIAL COSTS
dc.subjectFINANCIAL CRISIS
dc.subjectFINANCIAL DEPTH
dc.subjectFINANCIAL DEVELOPMENT
dc.subjectFINANCIAL EDUCATION
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL INTERMEDIARIES
dc.subjectFINANCIAL INTERMEDIATION
dc.subjectFINANCIAL LIBERALIZATION
dc.subjectFINANCIAL LITERACY
dc.subjectFINANCIAL LITERACY INITIATIVES
dc.subjectFINANCIAL LITERACY PROGRAMS
dc.subjectFINANCIAL MANAGEMENT
dc.subjectFINANCIAL MARKET
dc.subjectFINANCIAL MARKETS
dc.subjectFINANCIAL MATTERS
dc.subjectFINANCIAL POLICIES
dc.subjectFINANCIAL PRODUCTS
dc.subjectFINANCIAL REFORMS
dc.subjectFINANCIAL REGULATOR
dc.subjectFINANCIAL REGULATORS
dc.subjectFINANCIAL RESOURCES
dc.subjectFINANCIAL SECTOR
dc.subjectFINANCIAL SECTOR DEVELOPMENT
dc.subjectFINANCIAL SECTOR INDICATORS
dc.subjectFINANCIAL SECTOR POLICY
dc.subjectFINANCIAL SECTOR REFORM
dc.subjectFINANCIAL SERVICES
dc.subjectFINANCIAL SERVICES AUTHORITY
dc.subjectFINANCIAL SERVICES INDUSTRY
dc.subjectFINANCIAL STABILITY
dc.subjectFINANCIAL SYSTEM
dc.subjectFINANCIAL SYSTEMS
dc.subjectFORMAL CREDIT
dc.subjectFORMAL FINANCIAL INSTITUTION
dc.subjectFORMAL FINANCIAL INSTITUTIONS
dc.subjectFORMAL LOANS
dc.subjectGOVERNMENT POLICIES
dc.subjectHIGH INTEREST RATE
dc.subjectHIGH INTEREST RATES
dc.subjectHOUSEHOLDS
dc.subjectHOUSING LOANS
dc.subjectINDEBTEDNESS
dc.subjectINFORMAL FINANCIAL INSTITUTIONS
dc.subjectINFORMATION ASYMMETRIES
dc.subjectINPUT PRICES
dc.subjectINSTRUMENT
dc.subjectINTEREST RATE
dc.subjectINTEREST RATE CAP
dc.subjectINTEREST RATE CAPS
dc.subjectINTEREST RATE CEILING
dc.subjectINTEREST RATE CEILINGS
dc.subjectINTEREST RATE CONTROL
dc.subjectINTEREST RATE CONTROLS
dc.subjectINTEREST RATE REGIMES
dc.subjectINTEREST RATE RESTRICTIONS
dc.subjectINTEREST RATES
dc.subjectINTEREST RATES ON LOANS
dc.subjectINTERNATIONAL BANK
dc.subjectINTERNATIONAL FINANCE
dc.subjectINVESTMENT RESOURCES
dc.subjectLENDER
dc.subjectLENDERS
dc.subjectLIFE INSURANCE
dc.subjectLOAN
dc.subjectLOAN APPLICATIONS
dc.subjectLOAN CONTRACT
dc.subjectLOAN SIZE
dc.subjectLOAN TERMS
dc.subjectLOCAL CURRENCY
dc.subjectLOW-INCOME
dc.subjectLOW-INCOME BORROWERS
dc.subjectLOW-INCOME CONSUMERS
dc.subjectLOW-INCOME PEOPLE
dc.subjectLOWER INTEREST RATE
dc.subjectLOWER INTEREST RATES
dc.subjectLOWER-INCOME HOUSEHOLDS
dc.subjectMARKET COMPETITION
dc.subjectMARKET FAILURE
dc.subjectMARKET FAILURES
dc.subjectMASS MEDIA
dc.subjectMEDIUM ENTERPRISES
dc.subjectMFI
dc.subjectMFIS
dc.subjectMICRO-ENTREPRENEURS
dc.subjectMICROCREDIT
dc.subjectMICROFINANCE
dc.subjectMICROFINANCE INSTITUTIONS
dc.subjectMICROFINANCE LOANS
dc.subjectMONEY LENDING
dc.subjectMONEY MANAGEMENT
dc.subjectMONEYLENDERS
dc.subjectMORAL HAZARD
dc.subjectNEW MARKETS
dc.subjectNOMINAL INTEREST RATE
dc.subjectNOMINAL INTEREST RATES
dc.subjectOFFICE OF FAIR TRADING
dc.subjectOPERATIONAL COSTS
dc.subjectOUTSTANDING BALANCE
dc.subjectOVERDRAFTS
dc.subjectPAYDAY LENDERS
dc.subjectPAYDAY LOANS
dc.subjectPERSONAL FINANCIAL INFORMATION
dc.subjectPREDATORY LENDING
dc.subjectPRIVATE CREDIT
dc.subjectPROBABILITY
dc.subjectPRODUCTIVITY
dc.subjectREGULATORY AUTHORITY
dc.subjectRESERVE BANK
dc.subjectRISK MANAGEMENT
dc.subjectSAVINGS
dc.subjectSAVINGS ACCOUNTS
dc.subjectSAVINGS INSTITUTIONS
dc.subjectSAVINGS OPTIONS
dc.subjectSHORT-TERM LENDING
dc.subjectSMALL ENTERPRISES
dc.subjectSMALL LOANS
dc.subjectSOCIAL HOUSING
dc.subjectSOURCES OF CREDIT
dc.subjectSOURCES OF FINANCE
dc.subjectSUPPLY OF CREDIT
dc.subjectTOTAL COST
dc.subjectTRANSACTION
dc.subjectTRANSACTION COSTS
dc.subjectTRANSPARENCY
dc.subjectTRANSPARENCY OF INFORMATION
dc.subjectTRUE COST
dc.subjectTYPES OF CONSUMER
dc.subjectUNION
dc.subjectUNSECURED LOANS
dc.subjectUSURY
dc.subjectUSURY CEILINGS
dc.subjectUSURY LAW
dc.subjectUSURY LAWS
dc.subjectWITHDRAWAL
dc.titleInterest Rate Caps around the World : Still Popular, but a Blunt Instrumenten
dspace.entity.typePublication
okr.crossref.titleInterest Rate Caps around the World: Still Popular, but a Blunt Instrument
okr.date.disclosure2014-10-15
okr.date.doiregistration2025-04-10T09:55:19.648503Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2014/10/20303403/interest-rate-caps-around-world-still-popular-blunt-instrument
okr.globalpracticeFinance and Markets
okr.guid876751468149083943
okr.identifier.doi10.1596/1813-9450-7070
okr.identifier.externaldocumentum000158349_20141017143420
okr.identifier.internaldocumentum20303403
okr.identifier.reportWPS7070
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/10/17/000158349_20141017143420/Rendered/PDF/WPS7070.pdfen
okr.topicFinance and Financial Sector Development::Access to Finance
okr.topicMacroeconomics and Economic Growth::Investment and Investment Climate
okr.topicFinance and Financial Sector Development::Debt Markets
okr.topicFinance and Financial Sector Development::Financial Literacy
okr.topicBanks and Banking Reform
okr.unitFinance and Markets Global Practice Group
relation.isAuthorOfPublicationb5dea247-69d4-53cc-87d6-482abd725596
relation.isAuthorOfPublication.latestForDiscoveryb5dea247-69d4-53cc-87d6-482abd725596
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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