Posner,5,2,0,The award earlier this month of the Nobel Peace Prize to Muhammad Yunus and his Grameen Bank of Bangladesh has directed attention to the phenomenon of microfinance , which Yunus and his bank have pioneered .
Posner,5,3,0,The term refers to the making of tiny loans to poor people in underdeveloped countries , like Bangladesh .
Posner,5,4,0,The amounts are sometimes only tens of dollars , the borrowers are small farmers , shopkeepers , artisans , and other minute commercial enterprises -- overwhelmingly female -LRB- 97 percent -RRB- -- and the interest rates , which are designed to compensate the lenders fully , are high $     sometimes as high as 20 percent a day .
Posner,5,5,0,Although Yunus 's motivation is not primarily commercial , the high interest rates and a relatively low default rate -LRB- in part because groups of women related to or friends with the borrower often agree to guaranty repayment of the loan -RRB- , said to be only 1 percent , enable the Grameen Bank and its imitators -LRB- collectively referred to as '' '' '' `` MFIs '' '' '' '' -- microfinance institutions -- to cover their costs .
Posner,5,6,0,The MFIs provide other services to poor entrepreneurs as well , but the loans -LRB- '' '' '' `` micrcredit '' '' '' '' -RRB- are the most interesting feature of this experiment in helping poor countries throw off their poverty .
Posner,5,7,0,Microfinance began with the Grameen Bank in the 1980s , and to date the bank has disbursed almost $ 6 billion in loans to some 6 million people .
Posner,5,8,0,The total number of borrowers from all microfinance institutions is expected to reach 100 million by next year .
Posner,5,9,0,The aggregate value of these loans is a drop in the bucket so far as alleviating Third World poverty is concerned , but the award of the Nobel Prize is a vote of confidence that may encourage continued growth of the program .
Posner,5,10,0,What exactly microfinance has to do with '' '' '' `` peace '' '' '' '' is obscure .
Posner,5,11,0,The causes of war are complex , and it is by no means clear that poverty is a major one .
Posner,5,12,0,In any event the actual contribution of microfinance to peace must be slight and speculative .
Posner,5,13,0,So the award of a Nobel Peace Prize to Yunus was questionable , but that is not to criticize Yunus 's project .
Posner,5,14,0,The experiment is a worthy one , though its success has yet to be demonstrated despite glowing appraisals by Kofi Annan and others .
Posner,5,15,0,It may simply be the latest development fad .
Posner,5,16,0,It does however seem superior to philanthropy in the sense of handouts , which in this case would mean giving grants -LRB- or heavily subsidized loans -RRB- to small entrepreneurs on the basis of competitive applications .
Posner,5,17,0,For that is a competition in rhetoric .
Posner,5,18,0,Middlemen would spring up to assist the applicant in writing a persuasive application , and the fees charged by the middlemen would be a good example of how the prospect of obtaining economic rents -LRB- crudely , something for nothing -RRB- channels the expected rents into costs .
Posner,5,19,0,And the grants would frequently be misallocated .
Posner,5,20,0,The high interest rates that the microfinanciers charge induce self-selection by the borrowers : a borrower has to have confidence in the project for which he is seeking microcredit in order to be willing to assume the burden of servicing his debt .
Posner,5,21,0,Of course such confidence is sometimes , and perhaps among the poor often , misplaced .
Posner,5,22,0,An obvious question is why , if microfinance is remunerative , commercial banks and other commercial lenders did not enter the market long ago ; for as I said , microfinance began in the 1980s .
Posner,5,23,0,One possibility is that regulations designed to protect the solvency of banks limits their ability to make risky loans .
Posner,5,24,0,Usury laws may be an obstacle too , if they are differentially applied to ordinary lenders as distinct from microfinanciers -- yet the Grameen Bank seems to be an ordinary stock corporation , not a nonprofit .
Posner,5,25,0,More important may be the existence of a close substitute for microfinance in the form of informal loans by relatives and clan members , a method of financing that is feasible -LRB- and extremely common -RRB- in societies in which the clan and the extended family can discipline members by threat of ostracism and other informal sanctions .
Posner,5,26,0,The total capital possessed by the family or clan might be slight by usual commercial standards , yet if only one or a few members have any real entrepreneurial prospects , the limited capital may be sufficient to finance their tiny projects .
Posner,5,27,0,So microfinance is perhaps best understood as a device for easing the transition from an economy based on trust to a normal commercial society .
Posner,5,28,0,As a substitute for trust , microfinance has obvious drawbacks .
Posner,5,29,0,Extremely high interest rates , though justified not only by the risk of default -LRB- and the opportunity cost of money , that is , the riskless interest rate -RRB- but also by the very high transaction costs of a tiny loan -LRB- since those costs are largely fixed , rather than varying with the size of the loan -RRB- , burdens the borrower with very heavy fixed costs , since he must repay the loan regardless of the success of his enterprise .
Posner,5,30,0,The higher a producer 's fixed costs relative to his total costs , the riskier his enterprise , since if demand for his product falls or his marginal costs rise he will find it extremely difficult to adjust by cutting output ; the cut will reduce the revenue out of which he has to pay principal and interest on the loan .
Posner,5,31,0,Borrowing at astronomical interest rates seems an unlikely formula for commercial success -- and the more unlikely the poorer the borrower .
Posner,5,32,0,In the family or clan alternative , trust may provide an extremely low-cost substitute for the transaction costs involved in microfinance .
Posner,5,33,0,Perhaps then microfinance will occupy a narrow niche in capital markets between family and clan resource pooling at one end and commercial lending at the other .
Posner,5,34,0,Indeed , the fact that the overwhelming majority of microfinance borrowers are women suggests that the particular market failure that microfinance corrects is discrimination against women in the family and clan capital markets .
Posner,5,35,0,An alternative form of microfinancing would be equity rather than debt financing , on the model of private equity firms like Blackstone and the Carlyle Group .
Posner,5,36,0,Of course these multibillion dollars firms have no interest in making $ 100 loans in Bangladesh .
Posner,5,37,0,But the Grameen Bank could presumably furnish equity in lieu of loans to its customers , thus sharing the risk with them and so reducing the risk to them ; and it is a superior risk sharer because of size and diversification .
Posner,5,38,0,But maybe the bank would find it too difficult to evaluate projects , or would fear being inundated by applications from the impecunious .
Posner,5,39,0,I end on a skeptical note .
Posner,5,40,0,The evidence for the efficacy of microfinance in stimulating production and alleviating poverty is so far anecdotal rather than systematic .
Posner,5,41,0,The idea of borrowing one 's way out of poverty is passing strange .
Posner,5,42,0,And I am unaware of any historical examples of nations that climbed out of poverty on the backs of small entrepreneurs financed by credit .
Posner,5,43,0,Also , recall that Grameen Bank has lent almost $ 6 billion to some 6 million persons .
Posner,5,44,0,This implies an average loan of almost $ 1,000 , which in a country like Bangladesh is not chicken feed and makes one wonder how much of the Grameen Bank 's loan portfolio is actually microfinance .
Posner,5,45,0,-LRB- Yet the bank 's financial statement indicates that the average loan balance in 2005 was only $ 85 -- I do n't understand how this squares with the aggregate figures that I gave above , which are also published by the bank ! -RRB-
Posner,5,46,0,Then too , the bank has been in operation since 1983 , which is more than 20 years and indicates that the average number of borrowers is only 300,000 a year , with presumably many repeat borrowers .
Posner,5,47,0,Bangladesh has a population of almost 150 million people .
Posner,5,48,0,It is true that the microfinance movement is growing -- and as it grows we may see default rates rising and the microfinanciers adjusting , as the Grameen Bank may already have done , by greatly increasing the minimum size of loans .
Posner,5,49,0,Think back to that low default rate for the Grameen Bank .
Posner,5,50,0,The bank does not have written loan agreements and does not sue defaulters or invoke other legal remedies against them .
Posner,5,51,0,The natural inference to draw is that the bank is extremely selective in its choice of persons to whom it is willing to lend , and such selectivity , if imitated by other microfinanciers , must greatly limit the scope and impact of microfinance .
Posner,5,52,0,I suggest , albeit tentatively , that there may be a good less to microfinance than its boosters claim .
Becker,5,2,0,I applaud the granting of the Nobel Peace Prize to Muhammad Yunus and the Grameen Bank .
Becker,5,3,0,Sure , reducing poverty has at most an indirect connection with peace by encouraging democracy .
Becker,5,4,0,Still , the Peace Nobel prize has often been so political - it is different from other Nobel Prizes since the Peace Prize is awarded by the Norwegian Parliament - and frequently of such dubious merit , that it is a welcome change to have the Prize given to someone who has really helped the very poor of the world .
Becker,5,5,0,Yet , all economists who have studied microfinance agree that it will never be more than a minor factor in ending poverty in any country .
Becker,5,6,0,Economic growth requires secure property rights , encouragement of private enterprise , openness to international trade , stimulation of education , limited and sensible regulations , and reasonably honest government .
Becker,5,7,0,Microfinance makes only a small direct contribution to any of these variables .
Becker,5,8,0,However , microfinance does accomplish something useful , and that is how it should be evaluated .
Becker,5,9,0,So far microfinance has been mainly oriented toward women , although itthat is not necessary .
Becker,5,10,0,It started in the primarily Muslim rural areas of Bangladesh , where women had great difficult borrowing money in any way to earn income as tiny scale entrepreneurs .
Becker,5,11,0,Study of several of these programs suggest that in fact payback rates have been high since borrowers have been subject to great social pressure to repay , they have few alternative ways to borrow , and because of other factors .
Becker,5,12,0,These studies also suggest that women who borrow gain bargaining power within their families .
Becker,5,13,0,This shows up as an increase in the education of daughters and also sons , greater spending on medicines , and on women 's assets , like gold , in families that have women who borrowed under one of these programs .
Becker,5,14,0,These programs are usually quite flexible , and sometimes approach the equity type loans that XXXX advocates .
Becker,5,15,0,If someone is having trouble repaying debt due to no fault of her -LRB- or his -RRB- own , microfinance lenders , as well as other lenders in these communities , often wait until times get better , instead of demanding all payments be made on time .
Becker,5,16,0,In effect , microfinance often work out to be loans with returns that are quite sensitive to how well borrowers do .
Becker,5,17,0,Microfinance has spread to rural parts of non-Muslim countries , and these loans too are primarily given to women .
Becker,5,18,0,Evaluations of the effects of loans in non-Muslim countries also show high repayment rates , and that female borrowers repay at higher rates than , and generally outperform , male borrowers .
Becker,5,19,0,So loans in other countries appear to have similar effects as in Muslim countries like Bangladesh .
Becker,5,20,0,I do not believe there is much of a puzzle about why commercial institutions have not made such micro loans .
Becker,5,21,0,For one thing , enforcement of repayment by any particular borrower from the group of all borrowers in a local area was originated by the Grameen Bank , and would not be easily copied by for-profit banks and moneylenders .
Becker,5,22,0,But even if commercial lenders could have the same high repayment rates , these loans have not typically earned the rates of return required by commercial lenders in poor countries .
Becker,5,23,0,The Grameen Bank and other groups active in making micro loans have had some financing from NGO 's that do not seek to make commercial returns on their spending .
Becker,5,24,0,So my belief is that despite the seemingly '' '' '' `` high '' '' '' '' interest rates on these loans , they have earned returns , adjusted for servicing , risk , and other costs , that are below market interest rates in their respective countries ,
Becker,5,25,0,If private groups want to make gifts to rural women in poor countries , making them through micro loans is a much better way than many alternatives .
Becker,5,26,0,Loans at considerable interest rates aid donors select among a huge number of persons who believe they deserve help .
Becker,5,27,0,For by requiring recipients to engage in productive activities that yield enough returns to pay interest and repay principal , micro loans in effect choose to help those with ideas and a willingness to work hard .
Becker,5,28,0,What is a better way to choose among too many people who are really poor ?
Becker,5,29,0,In my judgment , it is always better as far as possible to reward people who try to help themselves .
Becker,5,30,0,The focus on women may be a good starting point in many countries since they have entrepreneurial ideas , and yet often have great difficulty in borrowing commercially , or even from their families .
Becker,5,31,0,Still , one risk here is that the apparent borrower is a woman , but the real borrower is her husband , brother , or father , and she is simply a front for them .
Becker,5,32,0,Moreover , many men in poor rural areas also have great difficulty getting access to funds , so these programs should include many more male borrowers as they grow in scope .
Becker,5,33,0,Individuals like Pierre Omidyar , one of the founders of eBay , has made a $ 100 million contribution to Tufts University for that university to invest in profit-making microfinance programs .
Becker,5,34,0,I share his apparent belief in the principle that competition among for-profit firms is the best way to organize and allocate resources in an economy .
Becker,5,35,0,It may be possible to get a fully for-profit sector that has large resources , and makes the small micro loans pioneered by the Grameen Bank .
Becker,5,36,0,I hope so , but the many for-profit moneylenders and banks in poor countries in the past did not manage to make such small loans at rates that were both profitable and appealing to borrowers .
Becker,5,37,0,So I am not convinced that his vision and that of some other American entrepreneurs will be successful .
Becker,5,38,0,But their vision of harnessing incentives from the for-profit sector is the right way to try to improve microfinance .
Posner,5,2,0,On October 29 , 2006 , shortly after the award of the Nobel Peace Prize to Muhammad Yunus and his Grameen Bank of Bangladesh , XXXX and I blogged about microfinance , which Yunus and his bank had pioneered .
Posner,5,3,0,The term  $ microfinance $ -LRB- or  $ microlending $ -RRB- refers to the making of tiny loans to small farmers , shopkeepers , artisans , and other minute commercial enterprises in underdeveloped countries such as India and Bangladesh at high interest rates $ '' sometimes as high as 20 percent a day .
Posner,5,4,0,In my blog posting , I called microfinance a worthy experiment , superior to philanthropy because the high interest rates that the microfinanciers charge should induce self-selection by the borrowers : a borrower has to have confidence in the project for which he is seeking microcredit in order to be willing to assume the burden of servicing his debt .
Posner,5,5,0,But I sounded a skeptical note .
Posner,5,6,0,I said that the  $ success -LRB- of microfinance -RRB- has yet to be demonstrated despite glowing appraisals by Kofi Annan and others .
Posner,5,7,0,It may simply be the latest development fad $  The evidence for the efficacy of microfinance in stimulating production and alleviating poverty is so far anecdotal rather than systematic .
Posner,5,8,0,The idea of borrowing one 's way out of poverty is passing strange .
Posner,5,9,0,And I am unaware of any historical examples of nations that climbed out of poverty on the backs of small entrepreneurs financed by credit .  $
Posner,5,10,0,I noted that the Grameen Bank had a surprisingly low default rate and pointed out that it  $ does not have written loan agreements and does not sue defaulters or invoke other legal remedies against them .
Posner,5,11,0,The natural inference to draw is that the bank is extremely selective in its choice of persons to whom it is willing to lend , and such selectivity , if imitated by other microfinanciers , must greatly limit the scope and impact of microfinance .  $
Posner,5,12,0,I concluded by  $ suggest -LRB- ing -RRB- , albeit tentatively , that there may be a good deal less to microfinance than its boosters claim .  $
Posner,5,13,0,Microfinance has continued to expand since 2006 .
Posner,5,14,0,The number of microloans made in India rose from 10 million in March 2007 to 26.7 million in March 2010 .
Posner,5,15,0,By the end of 2009 total microloans stood at $ 70 billion , half of them in India and Bangladesh .
Posner,5,16,0,But a series of suicides by microborrowers in the fall of 2010 in the Indian state of Andhra Pradesh , the site of more than 25 percent of Indian microlending , led to charges that the microlenders , which are commercial rather than eleemosynary enterprises -LRB- though , as we $  ll see , the Grameen Bank seems to straddle the two types of enteprise -RRB- , were charging exorbitant interest rates and coercing people into taking out loans they could not afford to repay .
Posner,5,17,0,Politicians urged borrowers not to repay their microloans ; and repayment rates , previously as high as 98 percent , plummeted to 10 to 20 percent .
Posner,5,18,0,The government of Andhra Pradesh has imposed strict limitations on microlending , and the Reserve Bank of India -LRB- India $  s central bank -RRB- has proposed that similar controls be established throughout India $ '' controls including a ceiling on interest rates and loan amounts and limiting eligibility to borrowers having an income above a specified level .
Posner,5,19,0,In December 2010 the prime minister of Bangladesh declared thatmicrolenders were  $ sucking blood from the poor in the name of poverty alleviation $ and ordered an investigation of Grameen Bank .
Posner,5,20,0,Similar reactions to microlending have taken place in Nicaragua , another country that had embraced microlending with enthusiasm .
Posner,5,21,0,And then just a week ago , in a short article in the New York Times entitled  $ Sacrificing Microcredit for Megaprofits ,  $ www.nytimes.com\/2011\/01\/15\/opinion\/15yunus.html?_r=2&scp=2&sq=microfinance&st=cse,Yunus himself wrote :  $ when I began working $  on what would eventually be called  $ microcredit ,  $  one of my goals was to eliminate the presence of loan sharks who grow rich by preying on the poor .
Posner,5,22,0,In 1983 , I founded Grameen Bank to provide small loans that people , especially poor women , could use to bring themselves out of poverty .
Posner,5,23,0,At that time , I never imagined that one day microcredit would give rise to its own breed of loan sharks .
Posner,5,24,0,But it has .  $
Posner,5,25,0,He writes that the problem  $ began around 2005 , when many lenders started looking for ways to make a profit on the loans by shifting from their status as nonprofit organizations to commercial enterprises .
Posner,5,26,0,In 2007 , Compartamos , a Mexican bank , became Latin America $  s first microcredit bank to go public .
Posner,5,27,0,And this past August -LRB- 2010 -RRB- , SKS Microfinance , the largest bank of its kind in India , raised $ 358 million in an initial public offering .  $
Posner,5,28,0,It seems rather an odd point for Yunus to make , because the Grameen Bank is itself a stock corporation , not a nonprofit .
Posner,5,29,0,See www.grameen-info.org\/index.php?option=com_content&task=view&id=179&Itemid=145 .
Posner,5,30,0,Yunus says in the Times article that all the bank $  s profits are returned to the borrowers in the form of dividends , but if so I don $  t understand how the bank attracts equity capital .
Posner,5,31,0,He contends that his is the best model for microlending , explaining that  $ commercialization has been a terrible wrong turn for microfinance , and it indicates a worrying  $ mission drift $  in the motivation of those lending to the poor .
Posner,5,32,0,Poverty should be eradicated , not seen as a money-making opportunity $  Instead of creating wholesale funds dedicated to lending money to microfinance institutions , as Bangladesh has done , these commercial organizations raise larger sums in volatile international financial markets , and then transmit financial risks to the poor $ 
Posner,5,33,0,Some advocates of commercialization say it $  s the only way to attract the money that $  s needed to expand the availability of microcredit and to  $ liberate $  the system from dependence on foundations and other charitable donors .
Posner,5,34,0,But it is possible to harness investment in microcredit $ '' and even make a profit  $ '' without working through either charities or global financial markets .  $
Posner,5,35,0,The phrase I $  ve italicized is strange , because Yunus claims that his bank does not make a profit , but instead distributes any surplus of income over expenses to the borrowers , and urges that as the model for the microfinance industry .
Posner,5,36,0,The recent uproar in microlending puts one in mind of our own controversies over payday lending , title lending -LRB- borrowing at high interest rates with one $  s car as security -RRB- , credit-card lending , and subprime mortgage lending $ '' all examples of loans at very high interest rates , made largely to unsophisticated consumers .
Posner,5,37,0,There is an inconclusive literature on the net social benefits of these forms of credit -LRB- sometimes lumped together in the term  $ fringe banking $ -RRB- .
Posner,5,38,0,The basic difference between our fringe banking and microfinance is that fringe banking is primarily consumer rather than commercial lending , but the small farmers and shopkeepers who take out microloans probably are even less sophisticated on average than the American customers for fringe banking .
Posner,5,39,0,Moreover , although what critics of fringe banking call  $ predatory lending $ is not highly regulated in the United States and as a result fraud and other exploitive conduct may well abound , regulatory protections are undoubtedly far weaker in countries like India and Bangladesh .
Posner,5,40,0,Yunus $  s mysterious nonprofit-profit model of microfinance can not attract substantial capital , but commercialized microfinance seems increasingly unlikely to have substantial social benefits $ '' and this with or without regulatory controls designed to protect unsophisticated borrowers .
Posner,5,41,0,Without the controls , there will undoubtedly be a good deal of fraud , and improvident borrowing without fraud .
Posner,5,42,0,With the controls , the amount of lending will be curtailed .
Posner,5,43,0,But with or without controls , the amount of lending will be limited by the very high default rates that can be anticipated unless there is very careful screening of would-be borrowers .
Posner,5,44,0,Interest rates will remain very high and will strangle many of the businesses that rely on microfinance .
Posner,5,45,0,Microfinance may turn out to be a niche service , with little overall impact .
Becker,5,2,0,Some enthusiasts for microfinance have sold it as an important component of the solution to poverty in developing countries .
Becker,5,3,0,It often does help lower poverty , especially of poor women , but it can not ever make more than a small contribution to overcoming poverty .
Becker,5,4,0,As I said on October 29 th 2006 when we posted on microfinance ,  $ Economic growth requires secure property rights , encouragement of private enterprise , openness to international trade , stimulation of education , limited and sensible regulations , and reasonably honest government .
Becker,5,5,0,Microfinance makes only a small direct contribution to any of those variables $ .
Becker,5,6,0,Others may subtract some of the variables I mention , and add different ones , but no serious development economist would suggest that microfinance would have a major role in the economic development of poor economies .
Becker,5,7,0,Nor did microfinance invent small-scale loans to poor farmers and others .
Becker,5,8,0,Local moneylenders in India and elsewhere have been doing that for centuries .
Becker,5,9,0,However , the Grameen Bank founded in 1983 by Muhammad Yunus discovered several rather new ways to lend to the poor .
Becker,5,10,0,This bank loaned primarily to poor women , usually Moslem women .
Becker,5,11,0,Local moneylenders generally ignored Moslem women , either out of prejudice against women managing their own -LRB- small -RRB- businesses , or for other reasons .
Becker,5,12,0,The Grameen Bank also encouraged the formation of credit groups of a few women , about five members typically , that guaranteed repayment of the loans made to each woman in the group .
Becker,5,13,0,Members of a group pressured other members to repay since they all might suffer if any member defaulted .
Becker,5,14,0,With these guarantees , a group did not have to put up any collateral for the loans made to its members , a big advantage to poor women .
Becker,5,15,0,Although microfinance has had only a small impact on overall poverty in any country or region , studies suggest it has helped the Moslem women who received small loans .
Becker,5,16,0,Families in which Moslem women have received microfinance improved the education of their children , especially the education of daughters , spent more on medicines , and accumulated more gold , which is usually the primary asset of Moslem women in Asia .
Becker,5,17,0,Yunus and many others have criticized the participation of for-profit lenders in microfinance .
Becker,5,18,0,Yet in fact , for-profit lenders have always participated , although on much smaller individual scales than the companies XXXX mentions -LRB- Compartamos and SKS Microfinance -RRB- that have hundreds of millions of dollars of capital .
Becker,5,19,0,For-profit lenders have charged  $ high $ interest rates , but they have usually been flexible in allowing borrowers to take longer to repay if they were experiencing temporary financial difficulties .
Becker,5,20,0,One would expect these lenders to adapt some of the lending innovations pioneered by the Grameen Bank and other microfinance lenders if the innovations improved repayments or helped in other ways to raise profits .
Becker,5,21,0,Although examples have been given of excessively high interest rates and other questionable terms changed by some for-profit micro lenders , it is not apparent that such behavior has been common .
Becker,5,22,0,Poor farmers are accustomed to the borrowing process because they need to borrow in order to finance their outlays on seed and other farm inputs that occur months before they harvest rice or other crops to sell .
Becker,5,23,0,Unscrupulous lenders could not easily fool these borrowers .
Becker,5,24,0,Even with well-informed borrowers , commercial interest rates will be high to borrowers with poor collateral , and to borrowers whose incomes fluctuate greatly due to the weather and other factors .
Becker,5,25,0,Government-imposed ceilings on interest rates and other lending restrictions are likely to prevent such borrowers from gaining access to funds , unless governments or NGOs provide subsidized lending .
Becker,5,26,0,This is why ceilings on interest rates and most other lending restrictions recently introduced or proposed will end up doing more harm than good .
Becker,5,27,0,After the financial crisis began , similar claims about exploitation of ignorant consumers were levied against providers of credit cards and mortgages .
Becker,5,28,0,These claims motivated the consumer  $ protection $ and other parts of The Dodd-Frank Wall Street Reform and Consumer Protection Act passed in July 2010 .
Becker,5,29,0,Yet little evidence suggests that borrowers were widely fooled by small print on borrowing contracts , by how interest rates were calculated , or by other claims about consumer exploitation -LRB- see my post on July 11 , 2010 -RRB- .
Becker,5,30,0,The consumer protection provisions of this Act will do little good , and will raise borrowing costs to the consumers who can least afford it .
Becker,5,31,0,Governments in countries with substantial microfinance should be mainly concerned about increasing the degree of competition among micro lenders in more remote rural areas .
Becker,5,32,0,For monopolies do charge excessively high interest rates , and require borrowers to satisfy other onerous terms .
Becker,5,33,0,Non-profits and other lenders should be encouraged to operate in localities where risk-adjusted interest rates are high , and anti-monopoly agencies should investigate possible collusion among lenders in these localities .
Becker,5,34,0,Such policies would be more effective than trying to discourage for-profit lenders from making microloans .