Regulation of microfinance institutions in Asia: A comparative analysis

Haq, M., Hoque, M. and Pathan, S. (2008) Regulation of microfinance institutions in Asia: A comparative analysis. International Review of Business Research Papers, 4 4: 421-450.

Author Haq, M.
Hoque, M.
Pathan, S.
Title Regulation of microfinance institutions in Asia: A comparative analysis
Journal name International Review of Business Research Papers
ISSN 1832-9543
Publication date 2008
Year available 2008
Volume 4
Issue 4
Start page 421
End page 450
Place of publication Berwick, Vic
Publisher World Business Institute
Collection year 2009
Language eng
Subject C1
1502 Banking, Finance and Investment
900101 Finance Services
900102 Investment Services (excl. Superannuation)
Abstract This paper compares the regulatory framework of the microfinance institutions (MFIs) in Asia. We find formal MFIs are generally regulated under the banking legislation and supervised by central banks. In contrast, semiformal institutions like NGO‐MFIs are regulated by either an apex organisation or other government body. Informal MFIs are not regulated but some are of sufficient size to become NGO‐MFIs or even banks. The formal MFI regulation seems effective but the internal controls, governance and ownership structure are disappointing for NGO‐MFIs, and of course for the informal MFIs. We propose a prudential regulatory environment for MFIs similar to the banking sector with the realisation that some existing banking rules may not be applicable to MFIs. The regulator should also remember the cost of overregulation. This regulation is a joint and separate responsibility of the governments, central banks, donors and private sectors. Their regulators require sufficient competence and supervision and enforcement skills to achieve a suitable regulatory environment to protect depositors but still encourage MFI to improve their outreach and attain sustainability.
Keyword Microfinance Institutions
Prudential regulations
Q-Index Code C1
Q-Index Status Confirmed Code

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Created: Wed, 18 Mar 2009, 17:14:54 EST by Karen Morgan on behalf of UQ Business School