A cross-country research of Microcredit in Italy and Albania

Abstract

Appropriate development model according to principles, methods and procedures can create more opportunities and help the financial inclusion of low-income individuals by supporting them to cover needs, growth of well-being and creation of small businesses. Microcredit, small amount of credit granted to those excluded from the traditional credit due to lack of collaterals, is one of such a kind development model. This thesis presents the microcredit model adopted in two countries Italy and Albania. An overview of the Italian and Albanian legislation in force with reasons and needs to regulate and supervise this sector is discussed. The demand segment is studied showing different customer needs, and the supply with the various models operating in both countries, highlighting the triangle operating model in Italy. A reference to a developed sector model as it may be the Italian one, can provide a valuable help in orienting future development of Albania, a developing country. Moreover, approaches used in microcredit institutions are presented. Some have a business approach aiming at having profits, others instead adopt a philanthropic approach by renouncing dividends. At the end, an empirical analysis is carried out on the growth issues of an Italian operator, Banca Etica, by understanding its credit quality, capital growth, and above all the profits it makes.