Preying for a Spot at the Table Examining Regulatory Policies and Solutions to Combat Predatory Microfinance Practices

Microfinance involves financial services such as small loans, savings accounts, and insurance to low-income populations typically excluded from traditional financial markets. While the services it provides can encourage entrepreneurship and work to alleviate poverty, insufficient regulation can lead to borrower exploitation and continued cycles of debt. This thesis explores the regulations leading to successful microfinance outcomes. Particularly, the variance in outcomes between Ghana and Jordan will be examined as a case study. In Ghana’s Wa West District, effective policies and financial literacy programs have enabled microfinance to promote economic growth. In the country of Jordan, however, a lack of strict standards and punitive debt laws have led to widespread borrower hardship and even imprisonment. To promote the success of microfinance programs, well-designed regulatory policies that emphasize borrower protection and fair interest rates are essential for ensuring that microfinance contributes to sustainable development rather than worsening poverty.