Microfinance in Turkey: A Sector Assessment Report

This report assesses the microfinance sector in Turkey and provides recommendations to support sector development by strengthening the enabling environment, promoting innovations in financial markets and supporting the establishment of institutions that demonstrate the commercial viability of microfinance delivery.

The report argues that:

• Once integrated with mainstream capital markets, microfinance institutions (MFIs) have the capacity to serve massive unmet demand for services;
• Development of the microfinance sector would help broad-based economic growth and reduce economic disparity among various sections of the population.

The report concludes that:

• Macroeconomic conditions are favorable to the development of the sector;
• The potential market appears infinite;
• The supply of microfinance services in Turkey is very limited both in terms of the numbers of people served and the range of services offered.

The report recommends:

• Establishing a clear and unambiguous legal framework for unlicensed MFIs;
• Finalizing the draft law that enables the emergence of specialized microfinance banks;
• Harmonizing legal frameworks across a range of institutional types to ensure a level playing field and a competitive operating environment.