The Regulation of Microfinance Institutions: A Zambian Case Study

Publication Date: 2006
Document Type: Case Study (PDF)

View this Document (1926 KB)   Email this Document

Micro- and macro-level analysis of the potential impact of regulation on the Zambian microfinance sector.

This thesis examines regulatory and supervisory issues in relation to microfinance in order to contribute to the design of regulatory policy in Zambia, and other developing countries in sub-Saharan Africa. It uses two levels of analysis, micro and macro:

• At the micro level, it evaluates the potential impact of regulation and supervision on the three MFIs licensed by the supervisory authority during the period of the study.
• At the macro level, it analyzes the entire microfinance sector using Regulatory Impact Assessment (RIA).

The study findings include:

• At the current stage of development, the regulation of the microfinance sector would have a detrimental effect on the development of the sector;
• The objectives for regulating the sector are unlikely to be met;
• The costs of compliance would be considerable and would outweigh any potential benefits that could be gained;
• Consequently, the introduction of microfinance specific regulations would most likely result in regulatory failure.

The study concludes with the recommendation that the current existing regulatory framework be maintained.

[Based on author's abstract]