The Legal Framework for Microlending inGermany and its Implications for theLending Design

In this paper we investigate the status quo of regulation for Microfinance Institutions (MFIs) inGermany. A short presentation of the legal framework is followed by a detailed account of thepractical implications for the lending design that MFIs face. Five different models of loan extensionare presented: the credit flow model, the trust model, the hybrids, the fund model, and theoutsourcing model. These models are illustrated by case studies which emphasize the organisationalconsequences for lending operations that MFIs face. The article concludes with several policyrecommendations that might serve as a first step towards better integrating microlending into theGerman banking system....