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The financial sustainability of Microcredit in Portugal


  • 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)


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.

Suggested Citation

  • Joana Silva Afonso & Isabel G Mota & Sandra T silva, 2011. "The financial sustainability of Microcredit in Portugal," Economics and Management Research Projects: An International Journal, Open Access International Journals, vol. 1(1), pages 53-56, March.
  • Handle: RePEc:por:emrpij:v:1:y:2011:i:1:p:53-56

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    Microcredit; Firms failure rate; Poverty; Financial sustainability;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy


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