The purpose of this case study is to analyze the provision of microfinance services in the Philippines formal financial system. The analysis centers on the financial regulations and supervisory practices of the Bangko Sentral ng Pilipinas (BSP) and its role in creating an environment conducive to the provision of these services.
Chapter Two describes the country's formal financial system. The chapter provides an overview of past and current developments in the system to the extent they affect microfinance services. It also provides a detailed analysis of BSP regulations and supervisory practices, with emphasis on those bearing directly on microlending.
Chapter Three analyzes the actual situation with regard to the provision of microfinance services within the formal financial system. It discusses the participation of regulated institutions such as the rural banks and, to a lesser extent, cooperatives in microlending. Sub-sections discuss the potential for the "transformation" of nongovernmental organizations, given the regulatory environment and the current capacity of NGOs to provide credit effectively.
Chapter Four discusses the prevalent distortions affecting microfinance, with a particular focus on those arising from government policies for poverty alleviation. It further discusses future steps toward improved microfinance supervision and regulation, the conclusions, and the lessons learned.
