World Bank Group2015-04-082015-04-082014-10https://hdl.handle.net/10986/21713Over the past few years, Microfinance Institutions (MFIs) in Iraq have emerged as credible sources of financing for low-income households and entrepreneurs, both underserved by conventional banks. Microfinance services in Iraq, however, are still nascent and far from meeting their full potential. Similar to many countries in the MENA region, MFIs in Iraq were set up as non-governmental organizations (NGOs) supported by a steady influx of donor funding. While these NGOs were initially able to grow through donor support, they are now struggling to meet increasing client demand as donor resources have dwindled, preventing them from making the necessary investments in capital and infrastructure to meet growing client demand. Many countries address this funding challenge by allowing institutions to provide financial services as companies or banks, helping them raise capital, provide new services, and increase their outreach in a sustainable manner. A similar path could be envisioned in Iraq, but is currently obstructed by regulatory hurdles. This diagnostic report aims to present and assess the current microfinance landscape in Iraq, including the legal and regulatory framework, recommend policy improvements to enhance the sustainability and operating environment for MFIs and their clients. This report argues that the current legal and regulatory environment for microfinance in Iraq hinders the growth and sustainability of the sector and furthermore advocates several short and medium term policy recommendations to enhance the overall operating environment for MFIs, the sustainability of the sector, and impact for clients.en-USCC BY 3.0 IGOACCESS TO CREDITACCESS TO FINANCEACCESS TO FINANCIAL SERVICESACCESS TO FINANCINGACCOUNTS RECEIVABLEAFFILIATESANTI-MONEY LAUNDERINGAUDITINGBALANCE SHEETBALANCE SHEETSBANK ASSETSBANK CREDITBANK GUARANTEESBANK LOANBANK LOANSBANKING LAWBANKING SECTORBANKING SYSTEMBORROWINGBORROWINGSBUSINESS LOANSCAPACITY BUILDINGCAPITAL ADEQUACYCAPITAL REQUIREMENTCAPITAL REQUIREMENTSCAPITAL STRUCTURECASH FLOWCENTRAL BANKSCOLLATERALCOLLATERAL REQUIREMENTSCOMMERCIAL BANKCOMMERCIAL BANKSCOMMERCIAL LENDINGCONSOLIDATED FINANCIAL STATEMENTSCONSUMER PROTECTIONCONTRACT ENFORCEMENTCONVENTIONAL BANKCONVENTIONAL BANKSCONVENTIONAL FINANCIAL INSTITUTIONSCOUNTRY COMPARISONSCREDIT BUREAUCREDIT BUREAUSCREDIT INFORMATIONCREDIT INFORMATION SYSTEMCREDIT LINESCREDIT PROVIDERSCREDIT REGISTRYCREDIT REPORTCREDIT REPORTINGCREDIT RISKCREDIT SCORESCREDITSCREDITWORTHINESSCURRENT ACCOUNTCURRENT ACCOUNTSCUSTOMER RELATIONSHIPDEBTDEBT BURDENDEPOSITDEPOSITSDEVELOPMENT CENTERDOCUMENTATION REQUIREMENTSDONOR FUNDINGDONOR RESOURCESDONOR SUPPORTECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIES OF SCALEEMPLOYEEEMPLOYEREMPLOYERSENTREPRENEURSEQUITY REQUIREMENTSEUROPEAN CENTRAL BANKEXCHANGE RATEEXTERNAL AUDITORSFAIR LENDINGFINANCE COMPANIESFINANCE COMPANYFINANCIAL COSTSFINANCIAL INSTITUTIONSFINANCIAL LEASINGFINANCIAL PERFORMANCEFINANCIAL REGULATORFINANCIAL RESOURCESFINANCIAL SECTOR DEVELOPMENTFINANCIAL SERVICEFINANCIAL SERVICE PROVIDERSFINANCIAL SERVICES PROVIDERSFINANCIAL SYSTEMFINANCIAL TRANSACTIONSFOREIGN ASSETSFOREIGN BANKSFOREIGN CURRENCIESFOREIGN CURRENCYFOREIGN EXCHANGEFOREIGN INVESTMENTFOREIGN INVESTMENTSFORMAL FINANCIAL INSTITUTIONFORMAL FINANCIAL SECTORFORMAL FINANCIAL SERVICESFREE LOANSFUNDING SOURCESGOVERNMENT FUNDINGGOVERNMENT INTERVENTIONGUARANTORSHOUSEHOLD WELFAREHOUSEHOLDSHOUSING LOANSINCOME GROUPINCOME STATEMENTSINCOME TAXINCOME-GENERATING PROJECTINCOME-GENERATING PROJECTSINDEBTEDNESSINEQUALITIESINEQUALITYINFORMATION GAPINFORMATION SHARINGINSIDER LENDINGINSURANCEINSURANCE POLICYINSURANCE SERVICESINTEREST RATEINTEREST RATESINVENTORYLAWSLEGAL FRAMEWORKLEGAL PROVISIONLEGAL REQUIREMENTLEGISLATIONLENDERSLEVEL PLAYING FIELDLIQUID ASSETSLOANLOAN AMOUNTLOAN AMOUNTSLOAN CLASSIFICATIONLOAN CONTRACTLOAN CONTRACTSLOAN DELINQUENCYLOAN DOCUMENTATIONLOAN PORTFOLIOLOAN PORTFOLIOSLOAN PROCESSINGLOAN PROCESSING TIMELOAN PROGRAMLOAN PROVISIONINGLOAN RECOVERYLOAN SIZELOAN TERMSLOW-INCOME CONSUMERSMARKET VALUEMAXIMUM LOAN AMOUNTMFIMFISMICRO-ENTERPRISESMICRO-LENDINGMICROCREDITMICROFINANCEMICROFINANCE INSTITUTIONMICROFINANCE INSTITUTIONSMONETARY POLICYMONEY LAUNDERINGMONEY TRANSFERMONEY TRANSFERSMOVABLE COLLATERALNEW ENTRANTSOPERATING COSTSOPERATIONAL COSTSOUTREACHOVERDRAFTPAYMENT OBLIGATIONSPAYMENT SERVICEPOSTAL SAVINGPRIVATE BANKSPRIVATE CREDITPRIVATE INVESTMENTPRIVATE LENDERPRODUCTIVITYPROFITABILITYPROPENSITY TO SAVEPROVIDERS OF CREDITPRUDENTIAL REGULATIONSPRUDENTIAL REQUIREMENTSPUBLIC CREDITPUBLIC FUNDSREAL ESTATEREGULATORY FRAMEWORKREPAYMENTREPAYMENT PERIODREPAYMENT RATESRESERVE REQUIREMENTRESOURCE ALLOCATIONRISK MANAGEMENTRISK OF LOSSSAVINGSSAVINGS BEHAVIORSECURITIESSMALL BUSINESSESSMALL ENTERPRISESSOCIAL RESPONSIBILITYSOURCE OF CREDITSOURCES OF CREDITSOURCES OF FUNDSSTOCK MARKETSUBSIDIARIESTAX EXEMPTIONSTERMS OF LOANTRADE CREDITSTRADE VOLUMETRANSPARENT MARKETUNEMPLOYMENTUNFAIR COMPETITIONURBAN AREASUSURYWHOLESALE FUNDINGWOMANWORKING CAPITALReportWorld Bank10.1596/21713