Abstract

Regulation is crucial for many reasons. More important than that is to produce an effective regulatory framework. In this paper, we will find that the first step in this framework is the philosophical foundation of Islamic microfinance institution‟s establishment that is formulated in their operations and incentives. Second, the policy issues related to regulations need to be addressed, among others: Islamic microfinance institution activities and Islamic microfinance institution-philanthropy links; effectiveness and sustainability; shariah based business model; who are the regulators; and ownership. Finally, we will discuss the experience of several countries in regulating Islamic microfinance institutions.

Keywords: regulation policy, Islamic microfinance institutions, regulatory philosophy, shariah
JEL Classification:D03, G21, G23, G28, P40,