A Framework for Regulating Microfinance Institutions: The Experience of Ghana and the Philippines

This paper is the follow-up of a Policy Research Working Paper entitled "A framework for regulating microfinance institutions". Its main objective is to study whether a country's legal and regulatory framework affects the sustainability of microfinance institutions. The paper:

• Describes the experiences of two countries, Ghana and the Philippines, that look similar for the wide range of informal, semiformal, and formal institutions providing financial services to the poor, but differ in how they regulate financial intermediation activities by microfinance providers;
• Seeks to identify the key elements and characteristics of the microfinance regulatory experience of Ghana and the Philippines;
• Draws some lessons that may be useful for other countries interested in developing sustainable microfinance institutions.

 The paper concludes that a transparent, inclusive regulatory framework is indispensable for enabling microfinance institutions to maintain market specialization and to pursue institutional development that leads to sustainability.