New Working Paper by Davide Forcella and SOCENT Professor Marek Hudon available on-line
CERMI-CEB Working Paper no. 14-020, entitled “Green Microfinance in Europe”, by Davide Forcella and SOCENT Professor Marek Hudon, is available on-line.
Abstract: Microfinance institutions (MFIs) are alternative financial providers offering financial services to people typically excluded from the standard banking sector. While most MFIs are active in developing countries, there is also a young and developing microfinance sector in Europe; however, very little literature exists on this MFI segment. In this paper, the authors analyze the environmental performance of 58 European MFIs. Their results suggest that the size of the MFI, investor concern for environmental performance and, to a lesser extent, donor interest, are closely related to the institution’s environmental performance. Moreover, providing loans larger than microcredits is linked to better environmental performance. This could suggest that the additional revenues generated from these loans, also called cross-subsidies, could help MFIs to strengthen their environmental bottom line. Finally, no evidence suggests that profit status explains environmental performance.