[2013] JARAMILLO, Miguel. Latin America’s Institutional and Regulatory Innovations for Microfinance Growth. ELLA. Economic Development, Microfinance, Policy Brief 2.

Current microfinance sector performance is associated with the reforms of Latin American countries’ financial sectors, starting at the end of the 1980s. Before the reforms, development of microfinance was constrained by an overly regulated financial industry that was primarily based on state participation. Streamlining regulation and implementing practices to supervise the sector provided microfinance institutions (MFIs) with the right environment to expand, innovate and become worldwide leaders in their field. This Brief provides an overview to the Latin American experience in regulating MFIs, covering the history of microfinance regulation in the region and the positive effects it has had on the sector’s current performance. It also highlights good practices in regulations, risk management and oversight, and concludes with lessons learned that might prove useful for other regions.