A new conception of microfinance

Dealing with microfinance presents two problems today: first, its operational limits are not clearly defined and, secondly, its very nature is unclear. Traditionally, microfinance is associated with programmes that benefit clients with serious subsistence problems in developing countries. Furthermore, for many years microfinance overlapped with microcredit. The continuous extension of financial services offered in microfinance programmes expands the boundaries of microfinance well beyond the classic role of financial assistance to the ‘poorest of the poor’, involving all victims of financial exclusion such as literature defines them. This work addresses these problems suggesting a new taxonomy for a modern microfinance. To achieve this, we analyzed the traditional features of microfinance and microcredit regarding to beneficiaries, services and institution to build a matrix of modern microfinance determined by the possible combinations of these three elements (beneficiaries–services–institutions). It is underlined that, as the level of ‘bankability’ of beneficiaries increases, the package of services that accompanies a microfinance programme is progressively more structured. In order to understand the real nature of modern microfinance, this paper finally intends to answer the question: does operating in microfinance mean operating in the field of ethical finance?