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The financial sustainability of Microcredit in Portugal

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  • Joana Silva Afonso

    ()
    (Associação Nacional de Direito ao Crédito)

  • Isabel G Mota

    ()
    (Faculdade de Economia do Porto)

  • Sandra T silva

    ()
    (Faculdade de Economia do Porto)

Abstract

Microcredit and microfinance emerged in the 1970’s in Bangladesh and other developing countries and expanded rapidly worldwide as a business model financially sustainable and able to fight poverty and social exclusion. Empirical evidence confirms microcredit ability to mitigate poverty but its financial sustainability is controversial. Using 2006-2009 Portuguese micro-level data, we estimate the failure rate of Portuguese micro-credit projects as 20,6%/year that, to be financially sustainable, would require a real interest rate by 25%/year. Using a territorial variable on a discrete Cox proportional hazard model with censured data, we estimate that the failure rate of those micro-credit projects located in the worst-case NUTS II Portuguese regions (Alentejo and Centro) and promoted by lower schooling people is significantly higher than best-case.

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Bibliographic Info

Article provided by Open Access International Journals in its journal Economics and Management Research Projects: An International Journal.

Volume (Year): 1 (2011)
Issue (Month): 1 (March)
Pages: 53-56

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Handle: RePEc:por:emrpij:v:1:y:2011:i:1:p:53-56

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Keywords: Microcredit; Firms failure rate; Poverty; Financial sustainability;

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