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Regulatory Frameworks for Village Banking and Financial Inclusion: Comparative Lessons from Africa, South Asia, and the Middle East

Author

Listed:
  • Nzovwa Banda

    (Graduate School of Business, The University of Zambia, Lusaka, Zambia)

  • Beatrice Matafwali

    (School of Education, The University of Zambia, Lusaka, Zambia)

  • Austin Mwange

    (Graduate School of Business, The University of Zambia, Lusaka, Zambia)

Abstract

Village banking is a crucial informal financial mechanism that fosters economic empowerment, financial inclusion, and poverty alleviation, particularly in low-income communities. However, the sustainability and growth of village banking groups are often hindered by governance challenges, financial risks, and inadequate consumer protection, necessitating well-structured regulatory frameworks. This study conducts a comparative literature review to analyze the financial inclusion regulatory frameworks governing village banking in Africa, South Asia, Southeast Asia, and the Middle East. The findings reveal diverse regulatory approaches, including tiered regulation models, voluntary registration systems, and digital financial service integration, which balance oversight with group autonomy. Notable regulatory frameworks, such as Uganda’s Tier 4 Microfinance Act, Tanzania’s tiered supervision, and Egypt’s multi-agency collaboration, demonstrate the benefits of structured yet flexible governance in enhancing financial inclusion. Additionally, mobile money platforms and digital record-keeping solutions have improved financial accessibility, transparency, and efficiency within savings groups. Despite these advances, challenges remain, including regulatory resistance, administrative burdens, and digital literacy gaps. The study recommends tiered regulatory frameworks, capacity-building initiatives, and enhanced regional cooperation to harmonize standards and promote sustainable financial inclusion.

Suggested Citation

  • Nzovwa Banda & Beatrice Matafwali & Austin Mwange, 2025. "Regulatory Frameworks for Village Banking and Financial Inclusion: Comparative Lessons from Africa, South Asia, and the Middle East," East African Finance Journal, East African Finance Journal, vol. 4(1).
    • Handle: RePEc:cwk:eafjke:2025-05
    DOI: 10.59413/eafj/v4.i1.5
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    References listed on IDEAS

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    1. Olipha Mpofu & Athenia Bongani Sibindi, 2022. "Informal Finance: A Boon or Bane for African SMEs?," JRFM, MDPI, vol. 15(6), pages 1-15, June.
    2. Md Abdullah Omar & Kazuo Inaba, 2020. "Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-25, December.
    3. Peterson K. Ozili & Adekemi Ademiju & Semia Rachid, 2022. "Impact of financial inclusion on economic growth: review of existing literature and directions for future research," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 50(8), pages 1105-1122, October.
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    Cited by:

    1. Grace Mary Mbabazi & Nixon Kamukama & Frederick Nsambu Kijjambu & John Rwakihembo & Alex Rubalema, 2026. "Dynamic Capabilities and Firm Innovation of Tier IV Microfinance Institutions in Uganda," American Journal of Finance, AJPO, vol. 12(1), pages 105-120.
    2. Grace Mary Mbabazi & Nixon Kamukama & Frederick Kijjambu & John Rwakihembo & Pereez Nimusima, 2026. "Firm Innovation and Financial Performance of Tier IV Microfinance Institutions in Uganda," American Journal of Finance, AJPO, vol. 12(1), pages 87-105.

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    More about this item

    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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