Microcredit Securitization

Microcredit and microfinance1 can be included in the branch of ethical finance2 that supports the struggle against poverty and financial exclusion.3 The term ‘microfinance’ is usually used to identify those financial services that are offered not only to clients with low income or none, but also to individuals who have difficulty in accessing basic financial services. The term ‘microcredit’ refers to small loans issued to individuals who are either poor or excluded from the financial system, and who lack traditional collateral; microcredit is usually granted in order to finance microentrepreneurial activity, and is often associated with technical support services and non-traditional collateral. According to this approach, microcredit is identifiable as a product of microfinance, and qualifies as an instrument in the struggle against poverty and financial exclusion, both due to the characteristics of the beneficiaries and to the technical and economic attributes of the instrument.4 The recent economic crisis has brought to the attention of European policymakers the debate on poverty and financial exclusion; in this context, microcredit is an instrument that has become highly regarded both by single states and by the European Commission. The search for resources to dedicate to microcredit has created the need for an alternative funding model specifically tailored to inclusive finance.