Reaching the Hard to Reach: Comparative Study of Member-Owned Financial Institutions in Remote Rural Areas

This study attempts to understand the types of member-owned financial institutions (MOIs) and support structures that might serve remote, rural populations, particularly the poor. The study examines literature reviews, case studies and thematic papers on key drivers of MOI outreach namely, internal governance, federations and linkages to external agents, and regulation and supervision. Study findings include:

• Linkages expand rural outreach but lessen members' sense of ownership and MOI performance;
• Large sophisticated networks effectively combine internal controls with external regulation and supervision;
• MOIs need some form of decentralization while ensuring enough standardization for control as they become larger and more sophisticated;
• MOIs have to sacrifice some local control benefits in order to obtain a broader range of services.

The study recommends:

• Basel Accord-like process to develop international guidelines for MOI regulation;
• International task force of experts, promoters and practitioners to build consensus on good practice for MOIs operating in rural areas;
• Analysis of how regulation and supervision frameworks affect MOI sustainability and rural outreach to help raise government and central bank awareness.