ABSTRACT

Financial exclusion in Europe, although lower than in developing countries and partially explained by self-exclusion, is still significant, especially in some countries and requires better tailoring of products. Looking at current trends in regulating microfinance and non-bank providers as well as in the application of other relevant laws affecting the sector, the European Union (EU) Member States show different patterns. Interest rates ceilings, when existing and set by the law or de facto, tend to be limited to consumer loans. However, Italy not only applies anti-usury interest rate caps to all loans but also sets stricter maximum interest rates for social microcredit, especially when provided by not-for-profit entities. Microfinance can be regulated alone or as a part of a larger scheme targeting socially responsible financial services. Microfinance institutions (MFIs), especially when deposit-taking, present many features in common with small banks and consequently raise similar legal issues.