A Social Performance Analysis of Italian Microfinance
This paper analyzes Italian MFIs’ social performance according to the framework developed by the Social Performance Task Force. It uses data collected in 2008 on a sample of 27 leading Italian MFIs.
Features of the Italian microfinance sector include small staff size, reliance on volunteers, below-market rate pricing policy, non-exclusive commitment to microcredit activities, and the free provision of nonfinancial services. Study findings indicate that:
- Social inclusion and fight against poverty are key goals for MFIs;
- Microcredit is essentially a tool to address social and financial exclusion among vulnerable groups;
- Microcredit is used only marginally as a financial instrument for small and medium enterprises and local development.
Finally, Italy’s microfinance sector is heavily subsidized, and demonstrates a poor commitment to financial self-sufficiency. This, combined with institutional constraints such as lack of a suitable regulatory framework, prevents financial soundness. They are unable to focus on the most disadvantaged groups, such as migrants, youth, usury victims and women.