ABSTRACT
This chapter explores issues surrounding the formalization and regulation of informal microenterprise finance programs that wish to borrow from other financial institutions or take deposits from the public, often their own microenterprise clients. It describes the provision of more adequate information by microenterprise finance programs. The chapter examines typical features of most microenterprise finance programs to see what implications these might have for an appropriate regulatory approach. One area of potential agreement about the formalization of informal microenterprise finance programs could thus be a major improvement in the provision of information. Microenterprise finance programs that supply deposit services to their microenterprise clients can benefit from whatever economies of scope exist between lending and providing deposit services. The potentially greater volatility of delinquency rates at microenterprise finance intermediaries, together with the greater threat to equity capital, suggests a possible need for more frequent reporting than for banks.
