IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/38732.html
   My bibliography  Save this paper

High Implicit Interest Rates in the Context of Informal Traditional Housing Transactions: Evidence from Morocco

Author

Listed:
  • Driouchi, Ahmed
  • Mertou, Amat

Abstract

The objective of this research is to investigate the situation of the poor in Morocco through assessing the implicit charges of informal housing transactions in different cities. A model allowing the calculation of the implicit interest rate from the traditional-mortgage transactions is applied. Data about traditional-mortgage housing transactions, duration, and rental values are collected from a sample of households in different cities. The results reveal that these transactions are costly although they involve small amounts of money. On average, a rate higher than 6% but lower than 50 % is implicitly implied in traditional-mortgage transactions. The overall results confirm that poor households are implicitly charged higher interest rates in their housing transactions in comparison with the explicit rates charged by formal credit markets, including microfinance. This implies that administrative and economic policies are to be further developed to ensure that poor households can easily access formal credit markets.

Suggested Citation

  • Driouchi, Ahmed & Mertou, Amat, 2012. "High Implicit Interest Rates in the Context of Informal Traditional Housing Transactions: Evidence from Morocco," MPRA Paper 38732, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38732
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/38732/1/MPRA_paper_38732.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Manojit Bhattacharjee & Meenakshi Rajeev, 2010. "Interest rate formation in informal credit markets in India: does level of development matter?," Global Development Institute Working Paper Series 12610, GDI, The University of Manchester.
    2. Ronald U. Mendoza, 2011. "Why do the poor pay more? Exploring the poverty penalty concept," Journal of International Development, John Wiley & Sons, Ltd., vol. 23(1), pages 1-28, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Begoña Gutiérrez-Nieto & Carlos Serrano-Cinca & Beatriz Cuéllar-Fernández & Yolanda Fuertes-Callén, 2017. "The Poverty Penalty and Microcredit," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(2), pages 455-475, September.
    2. Carlos Serrano-Cinca & Begoña Gutiérrez-Nieto & Beatriz Cuéllar Fernández & Yolanda Fuertes-Callén, 2013. "Poverty penalty and microfinance," Working Papers CEB 13-029, ULB -- Universite Libre de Bruxelles.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gibson, John & Kim, Bonggeun, 2013. "Do the urban poor face higher food prices? Evidence from Vietnam," Food Policy, Elsevier, vol. 41(C), pages 193-203.
    2. Bhattacharjee, Manojit & Rajeev, Meenakshi, 2014. "Is access to loan adequate for financing capital expenditure?: A household level analysis on some selected states of India," Working Papers 315, Institute for Social and Economic Change, Bangalore.
    3. Meenakshi Rajeev & Manojit Bhattacharjee & B P Vani, 2015. "Crop Insurance and Risk Mitigation: Experiences from India," ICDD Working Papers 15, University of Kassel, Fachbereich Gesellschaftswissenschaften (Social Sciences), Internatioanl Center for Development and Decent Work (ICDD).
    4. Serrano-Cinca, Carlos & Gutiérrez-Nieto, Begoña, 2014. "Microfinance, the long tail and mission drift," International Business Review, Elsevier, vol. 23(1), pages 181-194.
    5. Rajeev, Meenakshi., 2015. "Financial inclusion and disparity : a case of India," ILO Working Papers 994883243402676, International Labour Organization.
    6. Faisal Buyinza & John Mutenyo & Anthony Tibaingana, 2018. "Factors Affecting Access to Formal Credit by Micro and Small Enterprises in Uganda," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 4(4), pages 405-424, October.
    7. Sunil Sangwan & Narayan Chandra Nayak & Sweta Sen & Vikas Sangwan, 2023. "Does firm size affect client targeting? An investigation over the clients of the Indian Microfinance Institutions," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-8, December.
    8. Inge Geyskens & Barbara Deleersnyder & Marnik G. Dekimpe & Didi Lin, 2024. "Do consumers benefit from national-brand listings by hard discounters?," Journal of the Academy of Marketing Science, Springer, vol. 52(1), pages 97-118, January.
    9. Pravina Devpersadh Oodith, 2018. "Size and Shape: The Influence of Packaging on South African BOP Consumers' Decision-Making," Journal of Economics and Behavioral Studies, AMH International, vol. 10(1), pages 6-21.
    10. Carlos Serrano-Cinca & Begoña Gutiérrez-Nieto & Beatriz Cuéllar Fernández & Yolanda Fuertes-Callén, 2013. "Poverty penalty and microfinance," Working Papers CEB 13-029, ULB -- Universite Libre de Bruxelles.
    11. Zaman, Rafia & Das, Debasish Kumar & van Vliet, Oscar & Posch, Alfred, 2021. "Distributional inequality in market-based solar home system programs: Evidence from rural Bangladesh," Energy Economics, Elsevier, vol. 103(C).
    12. Carlos Serrano-Cinca & Begoña Gutiérrez-Nieto & Nydia M. Reyes, 2013. "A Social Approach to Microfinance Credit Scoring," Working Papers CEB 13-013, ULB -- Universite Libre de Bruxelles.
    13. Cariappa, A. G. Adeeth & Sendhil, R, 2021. "Does Institutional Credit Induce on-Farm Investments? Evidence from India," 2021 Conference, August 17-31, 2021, Virtual 315221, International Association of Agricultural Economists.
    14. Ronald Mendoza & Nicholas Rees, 2009. "Infant Mortality During Economic Downturns and Recovery," Working papers 0904, UNICEF,Division of Policy and Strategy.
    15. Aswini Kumar Mishra & Vedant Bhardwaj, 2022. "The Determinants of Access to Informal Credits in India: An Application of Quantiles via Moments Method," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(1), pages 1-22, March.
    16. Meenakshi Rajeev & Christoph Scherrer, 2021. "Smallholders’ Challenges: Realizing Peri-Urban Opportunities in Bengaluru," Sustainability, MDPI, vol. 13(18), pages 1-18, September.
    17. Rajeev, Meenakshi & Vani, B.P., 2014. "Uncertainty, risk and risk mitigation: Field experiences from farm sector in Karnataka," Working Papers 320, Institute for Social and Economic Change, Bangalore.
    18. Sinduja Srinivasan, 2014. "Impact of Public Works on Household Occupational Choice Evidence from NREGS in India," Working Papers WR-1053, RAND Corporation.
    19. Heinrich Zozmann & Alexander Morgan & Christian Klassert & Bernd Klauer & Erik Gawel, 2022. "Can Tanker Water Services Contribute to Sustainable Access to Water? A Systematic Review of Case Studies in Urban Areas," Sustainability, MDPI, vol. 14(17), pages 1-27, September.
    20. Simon Joncourt & Heiko Gebauer & Javier Reynoso & Karla Cabrera & Ana Valdes & Katharina Greve, 2019. "Extending the Base-of-the-Pyramid Concept," Service Science, INFORMS, vol. 11(3), pages 241-261, October.

    More about this item

    Keywords

    Keywords: Implicit interest rate- Informal Traditional Housing- Poverty-Morocco;

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:38732. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.