This paper attempts to find the fundamental similarity between micro-finance / micro-credit that is now very popular in the developing world, and consumer credit that is spreading rapidly in Japan, then discuss the implication to interest rate ceiling abolition in Japan.
The discussions over micro-finance / micro-credit in the developing world and the ones over consumer credit in Japan are both very active. However, we have not had the discussion that links these two discussions. Probably, the reason is that, unlike consumer credit that is considered as the means of consumption, micro-finance / micro-credit has been considered as the means to improve the poor’s income generation, not as the means of consumption.
Since I believe these two fields are fundamentally similar in many ways, I want to bridge these two fields.
In this paper, at first, I will discuss the definition of micro-finance / micro-credit and consumer credit in order to find the fundamental similarity between these two concepts. Then, I will discuss the interest rate regulation in the developing world, and try to discuss that it is still too early to conclude that interest rate will be controlled appropriately under interest rate regulation free environment.
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