Paper
Diagnostic Report on the Legal and Regulatory Environment for Microfinance in Jordan
A look at legal and regulatory changes that would improve the microfinance sector in Jordan
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11 pages
This report outlines the findings of a brief mission by the authors about policy obstacles to the development of microfinance in Jordan. The report:
- Provides an overview of the general financial system and a general description of the current state of development of the microfinance sector in Jordan;
- Describes the current legal and regulatory environment.
The report finds the following policy-related obstacles to the development of microfinance in Jordan:
- The potential of the proposed Bank for the Poor to harm the existing private micro-lending sector;
- The existence of government-backed subsidized direct lending;
- The lack of credit reference services;
- The absence of a comprehensive regulatory framework specifically applicable to micro-lenders;
- Scant provisions governing non-profit companies with limited liability;
- Leasing company provisions that might put micro-leasing out of the reach of existing market players.
The report concludes with the following recommendations for policy-related activities in Jordan:
- Contribution of the The Bank for the Poor towards the development of best practices for microfinance in Jordan;
- Awareness-building activities with policy-makers, particularly on the likely effects of interest-rate regulatory policies;
- Awareness-building activities with practitioners on the likely consequences of legislative and/or regulatory change, given the existing relatively benign environment;
- Review of options for regulatory elaboration of standards for non-depository microfinance under the Company Law;
- Targeted exemptions from leasing company provisions.
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