MICROFINANCE PUBLICATION ROUND-UP: Regulation and Supervision of Microfinance; Financial Inclusion in Russia; Life Microinsurance in Mexico

A Guide to Regulation and Supervision of Microfinance;” by Robert Peck Christen, Kate Lauer, et al; published by CGAP (Consultative Group to Assist the Poor); October 2012; 120 pages; available at: http://www.cgap.org/publications/guide-regulation-and-supervision-microfinance

This document is an update to “Guiding Principles on Regulation and Supervision of Microfinance,” which was published in 2003 by CGAP (Consultative Group to Assist the Poor), a US-based nonprofit policy and research center. The authors state that policy makers, donors and private investors in microfinance have come to appreciate the importance to poor people of financial services beyond credit, which was not previously widely understood. The guide discusses seven topics: (1) definitions of microfinance and microcredit, financial inclusion and the difference between prudential and nonprudential regulation; (2) the prudential regulation of deposit-taking institutions involved in microfinance; (3) the challenges of supervising such institutions; (4) nonprudential regulation of depository and nondepositiory institutions involved in microfinance; (5) regulation of branchless banking; and (6) observations, principles and recommendations. The authors conclude that regulators must understand microfinance clients and their needs, as well as products and services offered by institutions, in order to enforce regulation relating to financial inclusion in an optimal fashion. Additionally, the authors suggest that regulations be the same for all types of institutions in order to foster competition and minimize the incidence of institutions manipulating loopholes.

Landscaping Report: Financial Inclusion in Russia;” by Timothy Lyman, Stefan Staschen and Olga Tomilova; published by CGAP (Consultative Group to Assist the Poor); November 2012; 63 pages; available at: http://www.cgap.org/publications/landscaping-report-financial-inclusion-russia

This publication presents a summary of the status of and developments in financial inclusion in Russia from April through September 2012. The report explains the demand for and usage of formal financial services in the country, focusing on financially excluded people and the reasons for their continued exclusion. The authors then look at the supply of financial services via a variety of providers including the traditional banking sector, microfinance organizations and credit cooperatives. The document finally addresses financial infrastructure and a variety of projects aimed at increasing financial inclusion such as the “Increasing Access to Retail Financial Services and Microfinance Development in the Russian Federation” strategy for 2012-2016 that focuses on branchless banking solutions for financial service.

Price and Information Type in Life Microinsurance Demand: Experimental Evidence from Mexico;” by Jonathan Bauchet; December 2012; 52 pages; available at: https://files.nyu.edu/jb2933/public/JMP/Bauchet_JobMarketPaper.pdf

This paper examines the impact of price and information availability on client demand for life microinsurance among borrowers of Banco Compartamos, a Mexican microfinance bank. The study indicated that eliminating the subsidy on insurance coverage resulted in a decrease in coverage. Among clients who did not receive a subsidy, information provided regarding the financial or emotional toll that the cost of a funeral can have upon a family did not have an effect on the demand for coverage. However, relative to those who did not receive any information, young borrowers who were presented with an emotional message and middle-aged clients presented with a message about the financial impact of a funeral were less likely to drop their coverage when the subsidy was eliminated. The author suggests that the information provided at the time a client must choose whether to purchase insurance is critical to their risk management strategy.

About CGAP (Consultative Group to Assist the Poor)
CGAP (Consultative Group to Assist the Poor) is a US-based nonprofit policy and research center dedicated to providing financial access to poor people worldwide. CGAP is supported by approximately 30 development agencies and private foundations. Its mission is to provide market intelligence; promote standards and offer advisory services to governments, microfinance providers, donors and investors. CGAP reported total revenue of USD 29.5 million for the fiscal year ending June 2011. CGAP is co-located with the offices of the World Bank Group in Washington DC.

Sources and Additional Resources:

“A Guide to Regulation and Supervision of Microfinance,” http://www.cgap.org/publications/guide-regulation-and-supervision-microfinance

“Landscaping Report: Financial Inclusion in Russia,” http://www.cgap.org/publications/landscaping-report-financial-inclusion-russia

“Price and Information Type in Life Microinsurance Demand: Experimental Evidence from Mexico,” https://files.nyu.edu/jb2933/public/JMP/Bauchet_JobMarketPaper.pdf

MicroCapital.org story, December 12, 2012, “MICROFINANCE PUBLICATION ROUND-UP: Trends in Cross-Border Funding for Microfinance; Microinsurance Among Microcredit Groups in Tanzania; Asian Development Bank Interventions Fail to Reach Enough Poor People,” https://www.microcapital.org/microfinance-publication-round-up-trends-in-cross-border-funding-for-microfinance-microinsurance-among-microcredit-groups-in-tanzania-asian-development-bank-interventions-fail-to-reach-enough-poor/

MicroCapital.org story, November 3, 2012, “MICROCAPITAL BRIEF: CGAP (Consultative Group to Assist the Poor) Seeks Input on Capacity Building for Financial Inclusion,” https://www.microcapital.org/microcapital-brief-cgap-consultative-group-to-assist-the-poor-seeks-input-on-capacity-building-for-financial-inclusion/

MicroCapital Universe Profile: CGAP (Consultative Group to Assist the Poor)

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

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