Microfinance Regulation and Consumer Socio-Economic Security

Abstract

In 2006, the Nobel Peace Prize was awarded to Muhammad Yunus, who introduced microloans to poor rural women in Bangladesh to promote their economic growth and empowerment. This economic development model for the poor has expanded throughout the developing world and extended to a wide range of populations with different financial needs, known as microfinance. Microfinance clients typically do not have access to regular banking services because of a lack of collateral or physical proximity to service. Microfinance institutions (MFIs) can serve clients in remote rural areas with little transportation or infrastructure. This chapter examines the case for the regulation of microfinance providers, also known as microfinance institutions (MFIs). Such regulation ensures both economic growth and socio-economic security of vulnerable microfinance borrowers using Egypt as a case study.