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Insufficiencies and loopholes of self- regulation in overindebtedness prevention: The case of the Dominican Republic

Author

Listed:
  • J. Afonso
  • Solène Morvant-Roux
  • Davide Forcella
  • Isabelle Guérin

Abstract

The Dominican Republic’s microfinance sector is considered to be a growing and solid market. However, the widely implemented overindebtedness prevention best practices are by themselves not sufficient to prevent financial fragility among a part of the MFIs’ clients.We identify these practices as self-regulation mechanisms and, based on fieldwork conducted between 2012 and 2015, we show how they fail to fully fulfil their goals in the Dominican market. While financial exclusion supports the idea of an unlimited microcredit market, we argue that the focus on growth imperatives and high competition strongly jeopardize the positive outcomes of microcredit on clients’ well-being.

Suggested Citation

  • J. Afonso & Solène Morvant-Roux & Davide Forcella & Isabelle Guérin, 2016. "Insufficiencies and loopholes of self- regulation in overindebtedness prevention: The case of the Dominican Republic," Working Papers CEB 16-014, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/226292
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    More about this item

    Keywords

    microfinance; overindebtedness prevention; financial practices; self-regulation; Dominican Republic;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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