This study assesses how the policy, legal and regulatory framework has affected, and been influenced by, the development of rural and microfinance institutions (RMFIs) in Ghana, especially in terms of the range of institutions and products available, and their financial performance and outreach. The potential of microfinance to reach large numbers of the poor is well understood (Robinson, 2001). Questions for regulation are the extent to which a flexible regulatory environment can encourage innovation and a diversity of RMFIs and products serving different market niches not reached by commercial banks, and at what point special legislation may be needed, whether to facilitate the commercialization and sustainability of the rural and microfinance (RMF) industry or to protect deposits and ensure the stability of the financial system.

Ghana is particularly interesting because its tiered system of different laws and regulations for different types of institutions has evolved largely in response to local conditions, and because so many of its institutions are savings-based. The resulting system resembles the tiered approach recommended by the World Bank's 1999 study of microfinance regulation (Van Greuning et al., 1999) and more recently adopted by Uganda. While Ghana's approach has fostered a wide range of both formal and informal RMFIs, it has not as yet been so successful in achieving strong financial performance, significant scale, and true commercialization of microfinance.