The Microfinance Regulation Maze: A Systematic Literature Review

Microfinance regulation plays a crucial role in ensuring financial stability and client protection, yet their influence on Microfinance Institutions (MFIs) remains a topic of contention. Using Artificial Intelligence (AI) in the screening stage, this Systematic Literature Review (SLR) incorporates both quantitative and qualitative articles, offering a comprehensive analysis of the effects of regulatory measures on the performance of MFIs. Overall, we find that while microfinance regulation initially may hinder the financial and social performance of MFIs, in the
long run its stabilizing effects reverse the adverse effects through the self-correcting loop, which eventually support MFIs to systematic growth. Our study calls for an optimal level of regulation that increases the compatibility of the financial, social, and stability goals of microfinance.