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
Download 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.

About this Publication

By Lyman, T.R & Lauer, K.
Published