Microcredit in Advanced Economies as a "Third Way”: A Theoretical Reflection

This paper investigates whether microcredit can resolve the traditional conflict between the state and the market in advanced economies.

Microcredit has been gaining prominence in the budgets of monetary and financial institutions in developing countries. In developed countries, however, it reaches only a small percentage of the population. This is due to lack of demand and difficulty in finding convenient destinations for microloans. The small size of individual firms in developing countries represents versatility and adaptation to the environment. In contrast, in advanced economies, it demonstrates greater exposure to market changes and a lack of competitiveness compared to companies that enjoy large economies of scale.

In advanced economies, therefore, microcredit is one of many possible alternatives facing an individual below poverty line. The paper states that microcredit:

• Is mainly an instrument of solidarity, filling the gap left by absence of social safety nets and the reduction of the welfare state;
• Represents a third way as general nonprofit organisation instruments do;
• Has to be investigated within the nonprofit organization literature, rather than the framework of financial exclusion.