Ecuador Country Analysis
6 & 7. Legal and regulatory framework conducive to private investment and Governance and transparency assessment.
Ecuador has a strong legal and regulatory framework and solid institutional development compensates for a relatively weak investment climate. Regulatory framework
Regulation of microcredit operations:
The regulation of banks, financial associations, savings and credit mutual associations for housing, savings and credit co-operatives / credit unions above a certain minimum size (currently US $10m in assets), and investment and development corporations are all regulated by the Superinendencia de Bancos y Seguros. This government organization was created since 1927 after major changes in financial and banking laws. Apart from regulating the financial sector, the Superintendencia de Bancos y Seguros aims at:
Strengthening the legal framework in accordance to current international standards. * Works as a risk management agency * Protects final consumers rights * Strengthens human resource management. * Ensures the security and quality of the information and information systems with the most up to date technology. * Optimizes financial resource management.
Interest rate regulations have eased in 2009 after the turmoil of the 2007 financial crisis. There have been constant changes in policies on interest generally toward the loosening on rate caps and eliminating commissions in 2007-2008. In 2008, usury caps were established trough a new technical formula that gives caps for different segments. The problem arising with this formula is that it was found to be unconstitutional which has led the government to find other ways to lower the caps. This has been accused by some market participants as a discretionary and political move that have put into a predicament its survival. The government has also established several public programs with high subsidies to incentivize micro-firms causing certain market distortion. In
Ecuador has a strong legal and regulatory framework and solid institutional development compensates for a relatively weak investment climate. Regulatory framework
Regulation of microcredit operations:
The regulation of banks, financial associations, savings and credit mutual associations for housing, savings and credit co-operatives / credit unions above a certain minimum size (currently US $10m in assets), and investment and development corporations are all regulated by the Superinendencia de Bancos y Seguros. This government organization was created since 1927 after major changes in financial and banking laws. Apart from regulating the financial sector, the Superintendencia de Bancos y Seguros aims at:
Strengthening the legal framework in accordance to current international standards. * Works as a risk management agency * Protects final consumers rights * Strengthens human resource management. * Ensures the security and quality of the information and information systems with the most up to date technology. * Optimizes financial resource management.
Interest rate regulations have eased in 2009 after the turmoil of the 2007 financial crisis. There have been constant changes in policies on interest generally toward the loosening on rate caps and eliminating commissions in 2007-2008. In 2008, usury caps were established trough a new technical formula that gives caps for different segments. The problem arising with this formula is that it was found to be unconstitutional which has led the government to find other ways to lower the caps. This has been accused by some market participants as a discretionary and political move that have put into a predicament its survival. The government has also established several public programs with high subsidies to incentivize micro-firms causing certain market distortion. In