nep-mfd New Economics Papers
on Microfinance
Issue of 2014‒12‒24
one paper chosen by
Olivier Dagnelie
Université de Namur

  1. The Liquidity Premium: Commercial Banks versus Microfinance Institutions By Carolina Laureti; Ariane Szafarz

  1. By: Carolina Laureti; Ariane Szafarz
    Abstract: Using data from Bangladesh, this paper finds that the liquidity premium—the difference between the interest paid on illiquid and liquid savings accounts—is higher in commercial banks than in microfinance institutions. One possible interpretation lies in the higher prevalence of time-inconsistency among the poor. The observed difference in liquidity premia could be due to poor time-inconsistent agents willing to forgo interest on illiquid savings accounts in order to discipline their future selves.
    Keywords: liquidity premium; time-inconsistency; banks; microfinance; Bangladesh
    JEL: G21 G00 D14 D53 O16
    Date: 2014–11–26

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