Microfinance in developed countries: towards the growth of the sector

Inspired by the success of microfinance programs in developing countries, Governments have worked to replicate them also in industrialized economies. Despite the growth of the sector, microfinance’s academic research in developed countries is still very limited. The paper builds on the work of Prior and Argandoña (2009) which discusses four technical problems related to the diffusion of microfinance in developing countries. In re-framing their approach to apply it to developed countries we propose a set of recommendations in order to foster the growth of the microfinance sector: 1) the use of financial institutions to supply microfinance products; 2) the development of an alternative credit scoring in banks; 3) the adoption of a regulatory framework for microfinance; 4) the use of networks as social collaterals. The paper ends up suggesting future research trends grounding on our analysis of the industry.