Featured Essay: Bosnia

The Resource Center has commissioned “Essays on Regulation and Supervision” in which policymakers, practitioners, and others provide their views on the impact of regulatory reform for microfinance. In this month’s featured essay, Tim Lyman, International Legal Advisor to Bosnia’s Local Initiatives Project, writes about the development of the regulatory environment in Bosnia and Herzegovina and what’s in store for the future.

Following the war in Bosnia and Herzegovina a number of international donor and local initiatives funded microcredit projects.  This essay discusses the legal reform process undertaken in tandem with the development of Bosnia’s microcredit industry.  The original recommendations for tying microfinance legal and regulatory reform into broader financial sector regulatory reform were, through the political process, initially pushed aside in favor of a specialized law for microcredit-only, non-profit organizations.  As the microfinance industry has developed, new considerations regarding the role of banks, credit unions, and the question of whether microcredit organizations should be able to transform into for-profit, deposit-taking institutions will require re-thinking the legal and regulatory environment as well.