Regulation and performance of the microfinance industry

A major change to the regulatory regime in the microfinance industry in Bangladesh occurred when the Microcredit Regulatory Authority Act was enacted in 2006. Under the Act, microfinance institutions had to register with the Authority. Using as its theoretical underpinning responsive regulation and stakeholder theories, this study investigates differential governance and performance outcomes at both organisational and client level for institutions that did and did not register. The findings reveal that registered institutions perform comparatively better in terms of governance practices, outreach and financial sustainability and that their clients' financial literacy and financial status is better than for unregistered institutions.