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Green Microfinance in Europe

Author

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  • Davide Forcella
  • Marek Hudon

Abstract

Microfinance institutions (MFIs) are alternative financial providers offering financial services to people typically excluded from the standard banking sector. While most MFIs are active in developing countries, there is also a young and developing microfinance sector in Europe; however, very little literature exists on this MFI segment. In this paper, we analyze the environmental performance of 58 European MFIs. Our results suggest that the size of the MFI, investor concern for environmental performance and, to a lesser extent, donor interest, are closely related to the institution’s environmental performance. Moreover, providing loans larger than microcredits is linked to better environmental performance. This could suggest that the additional revenues generated from these loans, also called cross-subsidies, could help MFIs to strengthen their environmental bottom line. Finally, no evidence suggests that profit status explains environmental performance.

Suggested Citation

  • Davide Forcella & Marek Hudon, 2014. "Green Microfinance in Europe," Working Papers CEB 14-020, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:sol:wpaper:2013/174739
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    References listed on IDEAS

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    1. David Williamson & Gary Lynch-Wood & John Ramsay, 2006. "Drivers of Environmental Behaviour in Manufacturing SMEs and the Implications for CSR," Journal of Business Ethics, Springer, vol. 67(3), pages 317-330, September.
    2. Marek Hudon, 2009. "Should Access to Credit be a Right?," Journal of Business Ethics, Springer, vol. 84(1), pages 17-28, January.
    3. Susan Johnson, 1998. "Microfinance north and south: contrasting current debates," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(6), pages 799-810.
    4. Komatsu, Satoru & Kaneko, Shinji & Ghosh, Partha Pratim, 2011. "Are micro-benefits negligible? The implications of the rapid expansion of Solar Home Systems (SHS) in rural Bangladesh for sustainable development," Energy Policy, Elsevier, vol. 39(7), pages 4022-4031, July.
    5. Bert Scholtens, 2009. "Corporate Social Responsibility in the International Banking Industry," Journal of Business Ethics, Springer, vol. 86(2), pages 159-175, May.
    6. Beatriz Armendáriz & Ariane Szafarz, 2011. "On Mission Drift in Microfinance Institutions," World Scientific Book Chapters,in: The Handbook Of Microfinance, chapter 16, pages 341-366 World Scientific Publishing Co. Pte. Ltd..
    7. Fabrizio Botti & Marcella Corsi, 2011. "Measuring the Social Performance of Microfinance in Europe," Working Papers CEB 11-037, ULB -- Universite Libre de Bruxelles.
    8. Marion Allet, 2012. "Why do microfinance institutions go green?," Working Papers CEB 12-015, ULB -- Universite Libre de Bruxelles.
    9. Anastasia Cozarenco & Ariane Szafarz, 2013. "Female Access to Credit in France: How Microfinance Institutions Import Disparate Treatment from Banks," AMSE Working Papers 1350, Aix-Marseille School of Economics, France, revised Dec 2013.
    10. Fabrizio Botti & Marcella Corsi, 2010. "A Social Performance Analysis of Italian Microfinance," Working Papers CEB 10-020.RS, ULB -- Universite Libre de Bruxelles.
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    Keywords

    Corporate Social Responsibility; Europe; Environment; Microcredit; Microfinance;

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