Paper
Status of Microfinance in Western Europe - An Academic Review
How has microfinance evolved in Western European and what is its future?
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36 pages
This paper describes the Western European experience with microfinance so far and projects a view of its future. The paper describes:
- The evolution of microfinance in developing countries from financing development to developing financing;
- The roots of microfinance in Western Europe in terms of associations, individuals, the recent boom in the sector and the involvement of banks.
The paper states that in Western Europe:
- Microfinance is still a social cause, and as a result, microfinance schemes have not managed to overcome the obstacles of outreach and financial sustainability.
- Four different models of microfinance exist, these include:
- Non-government organizations (NGOs), with a microfinance approach;
- NGOs with a target-group driven approach;
- Support programs instituted by existing institutions and development banks;
- Specialized units of banks.
It then discusses the current knowledge about demand, operational levels, institutional levels, donor perspectives, the microfinance environment and impact in Western Europe, and concludes that:
- Microfinance is still young, but effective in Western Europe;
- Achieving organizational self-sufficiency, operational efficiency and growth in number of loans disbursed are the main challenges that microfinance providers face;
- There is a need for demand orientation in microfinance;
- The environment for microfinance is changing and this creates chances;
- There is a need to build an inclusive and entrepreneurial economy, in which microfinance would be a driving force.
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