Personal microcredit: an appropriate response to the financial needs of households?//

Funding:

Conseil Régional d’Aquitaine, Agence de Valorisation des Initiatives Socio-Economiques (AVISE, Paris), Fonds d’Action Sociale du Travail Temporaire (FASTT, Paris), Central Bank of Ireland (Dublin), Social Finance Foundation (Dublin), Comptrasec.

Project's holder:

Nicolas Rebière

Associated team:

UCD Geary Institute, University College Dublin

Duration:

5 years - September 2012 – November 2017

Abstract:

To meet the growing number of households excluded as from the credit market as from the circuit of social aid, the French government decided to promote personal microcredit in 2005 establishing the Fonds de Cohésion Sociale (FCS: Social Cohesion Fund), one of which mission is to ensure this type of loan at 50%. Thanks to its tailored specifications and to the required support of borrowers, this tool should in theory promote the professional and social integration of borrowers in financing all types of needs (purchase or repair of a vehicle, driving license, health expenditure, improvement of housing conditions …) except for the creation of activity and debt consolidation loan.

After more than six years of existence it is possible and desirable to analyze the extent to which personal microcredit is a relevant social innovation for the purposes of banking and social inclusion assigned.

It will first assess for France the impacts of personal microcredit for applicants and reflect on the comparative performance of different organizational choices that have been made. Wider will be questioned the learning of promoters of the personal microcredit regarding issues of banking inclusion and fight against poverty. We will also ask how this individualised and financial response accompanies ongoing institutional changes (crisis of labor society, questioning of the welfare state, financialisation of society) or constitutes a potential alternative, offering an opportunity to renew the implementation of national, regional and local solidarity.

The results for France are put in perspective with the situation in Ireland where access to credit has been made possible for the entire population – through liberalisation of the credit market – but to conditions that are often catastrophic for borrowers. This comparative approach will allow us not only to assess the risks of a response to financial need based almost exclusively on the market but also to disseminate and discuss at international level the lessons of the French experiment, first by feeding reflections conducted since 2010 by the Irish Ministry of Finance with a view to improving households’ financial inclusion.