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The financial sustainability of Microcredit in Portugal

Joana Silva Afonso (), Isabel Mota and Sandra Silva ()
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Joana Silva Afonso: Associação Nacional de Direito ao Crédito

Economics and Management Research Projects: An International Journal, 2011, vol. 1, issue 1, 53-56

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.

Keywords: Microcredit; Firms failure rate; Poverty; Financial sustainability (search for similar items in EconPapers)
JEL-codes: C31 G21 R58 (search for similar items in EconPapers)
Date: 2011
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