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IRIS 2006-01: Microfinance Regulation in Seven Countries: A Comparative Study

This paper argues that policy interventions should seek to address market failures - such as information constraints, transaction costs, risk allocation, and weak governance - rather than view the financial sector as an arm of anti-poverty programming. The paper: * Analyzes illustrative experiences in this field, with emphasis on those that have achieved some success; * Addresses the case of Bolivia, Brazil, Ghana, Indonesia, Mexico, the Philippines, and South Africa; Aims to bring international lessons to bear on microfinance regulatory development in India; * Examines the key features of microfinance regulation in each country, their evolution, and their impact. The paper: * Describes the size and characteristics of the microfinance market in the seven countries; * Presents data on growth trends contemporaneous with the introduction of reforms; * Looks at the development of the regulatory framework for microfinance, discussing both the main futures of the framework and the rationale and influences affecting its adoption; * Discusses the style, scope and location of supervisory powers and responsibilities - including delegated systems; * Examines sector promotion and development efforts that are part of the regulatory framework, or complementary to it; * Addresses the implementation and impact of regulatory regimes for microfinance; * Deals with the issue of how non-government organizations (NGOs) and other pre-existing microfinance providers cope with transformation to regulated status. The paper concludes that any regulatory intervention should be justified as the most cost-effective and realistic method for achieving policy aim.

PinoyME Foundation
Authors Keywords
Gallardo, Joselito; Meagher, Patrick; Campos, Pilar; Christen, Robert Peck; Druschel, Kate; Martowijo, Sumantoro; microfinance; microfinance regulation;
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Published in 2006 and available in the IRIS Center at the University of Maryland or can be downloaded as full text Downloaded 858 times since November 25, 2011