IDEAS home Printed from https://ideas.repec.org/p/ind/igiwpp/2011-007.html

The role of government in India's micro-finance industry

Author

Listed:
  • Renuka Sane

    (Indira Gandhi Institute of Development Research)

  • Susan Thomas

    (Indira Gandhi Institute of Development Research)

Abstract

Recent events in India have brought a fresh focus upon the problem of regulation in the field of micro-finance. This paper delineates the three distinct aspects where government needs to play a role. The first is to protect the rights of the micro-borrower, the consumer of micro-financial services. The second is that of prudential oversight of risk-taking by firms operating in micro-finance, since this could have systemic implications. The third is a developmental role, emphasising scale-up of the micro-finance industry where the key issues are diversification of access to funds, innovations in distribution and product structure, and the use of new technologies such as credit bureaus, the UID and mobile-based payments. Each of these roles need to be placed in an existing or a new regulatory agency. There is a case for creating a new regulatory agency which unifies the consumer protection function across all financial products.

Suggested Citation

  • Renuka Sane & Susan Thomas, 2011. "The role of government in India's micro-finance industry," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2011-007, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2011-007
    as

    Download full text from publisher

    File URL: http://www.igidr.ac.in/pdf/publication/WP-2011-007.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Luigi Zingales, 2009. "The Future of Securities Regulation," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 47(2), pages 391-425, May.
    2. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
    3. Shubhashis Gangopadhyay & Maitreesh Ghatak & Robert Lensink, 2005. "Joint Liability Lending and the Peer Selection Effect," Economic Journal, Royal Economic Society, vol. 115(506), pages 1005-1015, October.
    4. Robert Cull & Asli Demirgüç-Kunt & Jonathan Morduch, 2009. "Microfinance meets the market," Contemporary Studies in Economic and Financial Analysis, in: Moving Beyond Storytelling: Emerging Research in Microfinance, pages 1-30, Emerald Group Publishing Limited.
    5. Raghuram G. Rajan, 2010. "Fault Lines: How Hidden Fractures Still Threaten the World Economy," Economics Books, Princeton University Press, edition 1, number 9111, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Interesting readings
      by Ajay Shah in Ajay Shah's blog on 2011-08-21 10:29:00
    2. Difficulties with PFRDA's Draft Aggregator Regulations, 2014
      by Ajay Shah in Ajay Shah's blog on 2014-07-02 09:43:00
    3. Interesting Readings for August 23, 2011
      by Ajay Shah in Citizen Economists on 2011-08-23 21:40:50

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emilios Galariotis & Christophe Villa & Nurmukhammad Yusupov, 2011. "Recent Advances in Lending to the Poor with Asymmetric Information," Journal of Development Studies, Taylor & Francis Journals, vol. 47(9), pages 1371-1390, July.
    2. Burak Uras & Francesco Carli & Francesco Cecchi & Manuela Fritz, 2026. "Reviving Joint Liability Contracts: Asymmetric Joint Liability Loans and Moral Hazard," Department of Economics Working Papers 2026_106, Department of Economics, Williams College.
    3. Carli, Francesco & Cecchi, Francesco & Fritz, Manuela & Lensink, Robert & Uras, Burak, 2026. "Reviving Joint Liability Contracts: Asymmetric Joint Liability Loans and Moral Hazard," Other publications TiSEM 235b8664-29b4-448a-b240-e, Tilburg University, School of Economics and Management.
    4. Simon Zaby, 2019. "Science Mapping of the Global Knowledge Base on Microfinance: Influential Authors and Documents, 1989–2019," Sustainability, MDPI, vol. 11(14), pages 1-21, July.
    5. Janda, Karel & Zetek, Pavel, 2014. "Mikrofinanční Revoluce: Aktuální Kontroverze A Výzvy [Microfinance Revolution: Recent Controversies And Challenges]," MPRA Paper 54098, University Library of Munich, Germany.
    6. Lars Ivar Oppedal Berge & Armando José Garcia Pires, 2020. "Gender, formality, and entrepreneurial success," Small Business Economics, Springer, vol. 55(4), pages 881-900, December.
    7. Wagner, Charlotte & Winkler, Adalbert, 2013. "The Vulnerability of Microfinance to Financial Turmoil – Evidence from the Global Financial Crisis," World Development, Elsevier, vol. 51(C), pages 71-90.
    8. Janda, Karel & Zetek, Pavel, 2014. "Survey of Microfinance Controversies and Challenges," MPRA Paper 56657, University Library of Munich, Germany.
    9. Rodrigo Canales, 2014. "Weaving Straw into Gold: Managing Organizational Tensions Between Standardization and Flexibility in Microfinance," Organization Science, INFORMS, vol. 25(1), pages 1-28, February.
    10. Donal McKillop & John O.S. Wilson, 2011. "Credit Unions: A Theoretical and Empirical Overview," Financial Markets, Institutions & Instruments, John Wiley & Sons, vol. 20(3), pages 79-123, August.
    11. Liñares-Zegarra, José & Wilson, John O.S., 2018. "The size and growth of microfinance institutions," The British Accounting Review, Elsevier, vol. 50(2), pages 199-213.
    12. Bos, Jaap W.B. & Millone, Matteo, 2015. "Practice What You Preach: Microfinance Business Models and Operational Efficiency," World Development, Elsevier, vol. 70(C), pages 28-42.
    13. Jia, Xiangping & Cull, Robert & Guo, Pei & Ma, Tao, 2016. "Commercialization and mission drift: Evidence from a large Chinese microfinance institution," China Economic Review, Elsevier, vol. 40(C), pages 17-32.
    14. Sheri Markose & Thankom Arun & Peterson Ozili, 2022. "Financial inclusion, at what cost? : Quantification of economic viability of a supply side roll out," The European Journal of Finance, Taylor & Francis Journals, vol. 28(1), pages 3-29, January.
    15. Bert D'Espallier & Marek Hudon & Ariane Szafarz, 2016. "Aid Volatility and Social Performance in Microfinance," Working Papers CEB 16-015, ULB -- Universite Libre de Bruxelles.
    16. Innocent BAYAI & Sylvanus IKHIDE, 2018. "FINANCING STRUCTURE AND FINANCIAL SUSTAINABILITY OF SELECTED SADC MICROFINANCE INSTITUTIONS (MFIs)," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(4), pages 665-696, December.
    17. Sunny Li Sun & Junyon Im, 2015. "Cutting Microfinance Interest Rates: An Opportunity Co–Creation Perspective," Entrepreneurship Theory and Practice, , vol. 39(1), pages 101-128, January.
    18. Abhi Dattasharma & Rajalaxmi Kamath & Smita Ramanathan, 2016. "The Burden of Microfinance Debt: Lessons from the Ramanagaram Financial Diaries," Development and Change, International Institute of Social Studies, vol. 47(1), pages 130-156, January.
    19. Giovanni BUSETTA & Alberto ZAZZARO, 2006. "Mutual Loan-Guarantee Societies in Credit Markets with Adverse Selection: Do They Act as a Sorting Device?," Working Papers 273, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    20. R. Øystein Strøm & Bert D’Espallier & Roy Mersland, 2023. "Female Leaders and Financial Inclusion: Evidence from Microfinance Institutions," Review of Corporate Finance, now publishers, vol. 3(1-2), pages 69-97, May.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ind:igiwpp:2011-007. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Shamprasad M. Pujar (email available below). General contact details of provider: https://edirc.repec.org/data/igidrin.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.