How should microfinance activities be regulated?
Regardless of whether a new institutional form is created or whether microfinance activity is conducted across the financial system, regulators need to put special regulations into place that accommodate the uniqueness of microfinance activity. First, some definition of the term “microfinance” is needed to distinguish it from commercial or consumer finance. Such definitions are usually based on lending activity, and may include items such as loan size limits, microentreprenurs as borrowers, and credit decisions.
