| dc.description.abstract | Appropriate regulation and supervision in the microfinance is imperative in
bringing the poor and the low income communities the financial services that
they need at their level. This is the essence of financial inclusion and it is
important in the wholesome development ofall sections ofthe population.
The aim of this research is to contribute to the understanding of microfinance
regulatory and supervisory issues. The principal objective is to inform the
design ofregulatory policy in Kenya. This thesis provides a critical evaluation of
the potential impact of regulation on microfinance institutions in achieving
financial inclusion.
The analysis involves a review of existing research work on regulation of
microfinance, analysis of the current microfinance regulatory framework in
Kenya and a study of other jurisdictions, namely Peru and Ghana. This study
finds that regulation of microfinance has an impact on the effectiveness of the
institutions in increasing or encouraging financial inclusion.
Moreover, the findings in the study suggest that high minimum capital
requirements for Deposit Taking Microfinance close out potential MFIs which
can operate on small scale thus hampering financial inclusion. It also finds
that the regulatory system of microfinance in Kenya tends to diminish the
charity aspect in microfinance. In addition, the findings of the study suggest
that the costs of compliance with the regulatory requirement are considerably
highand outweigh the potential benefits that would be gained by the
institutions. As a result, microfinance services are generally expensive and the
poor shy from them.
The study thus concludes with the recommendation that a number of aspects
of the microfinance regulatory system in Kenya be reviewed. It recommends
practical measures that can go a long way in addressing the problems in the
current regulatory framework | en_US |
