(1) cost of capital
Mainly refers to the price paid by microfinance institutions for their own funds, absorbed bank deposits, central bank refinancing and possession of interbank borrowing funds, that is, their external financing costs.
(2) Management expenses
It mainly includes the depreciation expenses of office equipment, pre-loan investigation, in-loan investigation and post-loan inspection of microfinance institutions at all levels.
(3) Risk cost
It mainly refers to the potential or actual loan principal and interest amount that cannot be recovered on schedule due to the customer's performance ability, willingness to perform, natural disasters, market changes and other factors, which is reflected in the provision for bad debts and the write-off of bad debts in accounting. The former is a reflection of potential losses, while the latter is a reflection of actual losses.
(4) Tax burden cost
Refers to business tax, urban maintenance and construction tax, education surcharge, income tax, etc. That is, microfinance institutions should pay in accordance with the provisions of the national tax law in the course of operation, and part of it constitutes the outflow of cash from microfinance institutions, which is an important cost expenditure item.