Regulatory approaches and Microfinance Institution (MFI) performance: Impact of function-specific regulation

Microfinance, from a humble beginning in the 1970s as a provision of small, collateral-free, or low-collateral loans to poor clients in developing countries, has functionally and institutionally diversified significantly over the past several decades to provide several financial products and services by a range of institutions from non-governmental organizations (NGOs) to banks. This research analyses on a cross-country basis the impacts on MFI's social and financial performance arising from three important aspects with regard to the regulation and supervision of microfinance institutions (MFIs). First, the impact of interest rate caps on the performance of MFIs is analyzed. Second, the impact of microfinance-specific regulation on MFI performance is examined. Third and finally, the impact of microfinance-specific regulators on MFI performance is explored.