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

J. Afonso, Solène Morvant-Roux, Davide Forcella and Isabelle Guérin

No 16-014, Working Papers CEB from ULB -- Universite Libre de Bruxelles

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.

Keywords: microfinance; overindebtedness prevention; financial practices; self-regulation; Dominican Republic (search for similar items in EconPapers)
JEL-codes: D18 G10 G21 R21 (search for similar items in EconPapers)
Date: 2016-02-08
New Economics Papers: this item is included in nep-mfd
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