n Review of Development Finance - An ethical barrier to Japanese funding of microfinance institutions in developing countries

Volume 9 Number 1
  • ISSN : 1879-9337


Some microfinance institutions (MFI) charge very high interest rates to borrowers in developing countries. However, in Japan, domestic laws regulate the interest rate ceiling for lending. Thus, when Japanese people consider providing funding to MFI, an ethical conflict may emerge. We conduct a questionnaire survey and find that some Japanese consider that funding financial institutions that charge high interest rates is incorrect from an ethical point of view. An additional probit analysis indicates that income and age affect the attitudes toward high interest rates.

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