Henriquez Gallegos, Claudia AlejandraMaimbo, Samuel Munzele2014-10-302014-10-302014-10https://hdl.handle.net/10986/20494Among 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-USCC BY 3.0 IGOACCESS TO CREDITACCESS TO FINANCEACCOUNTINGADMINISTRATIVE FEESADVISORY SERVICESANNUAL INTEREST RATEANNUAL INTEREST RATESANNUAL PERCENTAGE RATEAPRAVAILABILITY OF CREDITAVERAGE INTERESTAVERAGE INTEREST RATEAVERAGE INTEREST RATESBANK ACCOUNTSBANK ASSETBANK COMPETITIONBANK LENDINGBANK LOANSBANKING SYSTEMBANKSBONDBOND RATESBORROWINGBUSINESS TRANSACTIONSCOLLATERALCOMMERCIAL BANKCOMMERCIAL BANKSCOMMERCIAL CREDITCOMMERCIAL LENDINGCOMMERCIAL LOANSCOMMERCIAL TRANSACTIONSCONSUMER CREDITCONSUMER CREDITSCONSUMER FINANCIAL LITERACYCONSUMER LITERACYCONSUMER LOANSCONSUMER ORGANIZATIONSCONSUMER PROTECTIONCONTRIBUTIONCOST OF CREDITCREDIT BUREAUCREDIT BUREAUSCREDIT CARDCREDIT CARDSCREDIT INFORMATIONCREDIT INFORMATION SYSTEMSCREDIT INSTITUTIONSCREDIT MARKETCREDIT PROVIDERCREDIT PROVIDERSCREDIT TRANSACTIONSCREDIT UNIONCREDIT UNIONSCREDITORCREDITORSCREDITSCREDITWORTHINESSCROP INSURANCECURRENCYCURRENT ACCOUNTCURRENT INTEREST RATEDEBTDEVELOPING COUNTRIESDEVELOPMENT BANKDEVELOPMENT BANKSEDUCATED CONSUMEREDUCATIONAL LEVELEMPLOYERSEXCESSIVE INTEREST RATESEXPLOITATIONFAIR TRADINGFARMERSFINANCIAL ACCESSFINANCIAL CONSUMERFINANCIAL COSTSFINANCIAL CRISISFINANCIAL DEPTHFINANCIAL DEVELOPMENTFINANCIAL EDUCATIONFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIATIONFINANCIAL LIBERALIZATIONFINANCIAL LITERACYFINANCIAL LITERACY INITIATIVESFINANCIAL LITERACY PROGRAMSFINANCIAL MANAGEMENTFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL MATTERSFINANCIAL POLICIESFINANCIAL PRODUCTSFINANCIAL REFORMSFINANCIAL REGULATORFINANCIAL REGULATORSFINANCIAL RESOURCESFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SECTOR INDICATORSFINANCIAL SECTOR POLICYFINANCIAL SECTOR REFORMFINANCIAL SERVICESFINANCIAL SERVICES AUTHORITYFINANCIAL SERVICES INDUSTRYFINANCIAL STABILITYFINANCIAL SYSTEMFINANCIAL SYSTEMSFORMAL CREDITFORMAL FINANCIAL INSTITUTIONFORMAL FINANCIAL INSTITUTIONSFORMAL LOANSGOVERNMENT POLICIESHIGH INTEREST RATEHIGH INTEREST RATESHOUSEHOLDSHOUSING LOANSINDEBTEDNESSINFORMAL FINANCIAL INSTITUTIONSINFORMATION ASYMMETRIESINPUT PRICESINSTRUMENTINTEREST RATEINTEREST RATE CAPINTEREST RATE CAPSINTEREST RATE CEILINGINTEREST RATE CEILINGSINTEREST RATE CONTROLINTEREST RATE CONTROLSINTEREST RATE REGIMESINTEREST RATE RESTRICTIONSINTEREST RATESINTEREST RATES ON LOANSINTERNATIONAL BANKINTERNATIONAL FINANCEINVESTMENT RESOURCESLENDERLENDERSLIFE INSURANCELOANLOAN APPLICATIONSLOAN CONTRACTLOAN SIZELOAN TERMSLOCAL CURRENCYLOW-INCOMELOW-INCOME BORROWERSLOW-INCOME CONSUMERSLOW-INCOME PEOPLELOWER INTEREST RATELOWER INTEREST RATESLOWER-INCOME HOUSEHOLDSMARKET COMPETITIONMARKET FAILUREMARKET FAILURESMASS MEDIAMEDIUM ENTERPRISESMFIMFISMICRO-ENTREPRENEURSMICROCREDITMICROFINANCEMICROFINANCE INSTITUTIONSMICROFINANCE LOANSMONEY LENDINGMONEY MANAGEMENTMONEYLENDERSMORAL HAZARDNEW MARKETSNOMINAL INTEREST RATENOMINAL INTEREST RATESOFFICE OF FAIR TRADINGOPERATIONAL COSTSOUTSTANDING BALANCEOVERDRAFTSPAYDAY LENDERSPAYDAY LOANSPERSONAL FINANCIAL INFORMATIONPREDATORY LENDINGPRIVATE CREDITPROBABILITYPRODUCTIVITYREGULATORY AUTHORITYRESERVE BANKRISK MANAGEMENTSAVINGSSAVINGS ACCOUNTSSAVINGS INSTITUTIONSSAVINGS OPTIONSSHORT-TERM LENDINGSMALL ENTERPRISESSMALL LOANSSOCIAL HOUSINGSOURCES OF CREDITSOURCES OF FINANCESUPPLY OF CREDITTOTAL COSTTRANSACTIONTRANSACTION COSTSTRANSPARENCYTRANSPARENCY OF INFORMATIONTRUE COSTTYPES OF CONSUMERUNIONUNSECURED LOANSUSURYUSURY CEILINGSUSURY LAWUSURY LAWSWITHDRAWAL10.1596/1813-9450-7070