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Microfinance intermediation: regulation of financial NGOs in Ghana

Olivia Anku-Tsede (Department of Organisation and Human Resources Management, University of Ghana Business School, University of Ghana, Accra, Ghana)

International Journal of Law and Management

ISSN: 1754-243X

Article publication date: 8 July 2014




This study aims to seek to fill a gap in regulatory impact assessment in developing countries by presenting an analysis of how formal regulation impact on the efficiency and productivity of financial non-governmental organisations (FNGOs) in Ghana. Much has been written about the formal financial sector, but very little is known about the lower end of microfinance and the impact of formal prudential regulation on FNGOs providing microfinance services. The Bank of Ghana (BOG), nevertheless, in the year 2011, extended formal prudential regulation to FNGOs without any empirical basis. This study uses regulatory theories and empirical evidence to aid in the evaluation of whether formal prudential regulation is appropriate for FNGOs operating within the microfinance sector.


Empirical evidence derived from FNGOs, regulatory agents, consumers and financial lawyers within the Greater Accra and Ashanti Regions of Ghana served as the basis of the analysis in this study. Descriptive statistics, frequency counts and percentage scores, were used to analyse the data collected.


The existing structures of FNGOs in Ghana are unsuitable for formal prudential regulation. The BOG does not have adequate staffing and funding to supervise and monitor the microfinance activities of FNGOs. Formal prudential regulation could impede growth and efficient delivery of microfinance services.

Research limitations/implications

The BOG is the only regulatory agency responsible for regulating the financial market in Ghana, thus access to officers with knowledge in the regulatory regime was very limited.

Practical implications

The study revealed in depth information about FNGOs, microfinance and the impact of formal prudential regulation on FNGOs.


The study is the first to use empirical studies and theories of regulation to assess the impact of extending formal prudential regulation to FNGOs in Ghana. Data from the regulator, the regulated and consumers, the key players in any regulatory process, served as the basis of the analysis in the study resulting in the unravelling of in-depth information on the regulation of FNGOs.



The author wishes to thank the University of Ghana Business School for its financial assistance. The author is grateful to Victor Anku-Tsede, Dr Dan Ofori and Michael Gyensare for their support. The author accepts full responsibility for the opinions expressed in the article but grateful to Michael Gyensare and Victor Anku-Tsede for their comments.


Anku-Tsede, O. (2014), "Microfinance intermediation: regulation of financial NGOs in Ghana", International Journal of Law and Management, Vol. 56 No. 4, pp. 274-301.



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