Overindebtedness: what could we learn from microcredit?

1
Overindebtedness what could we learn from
microcredit?

• Georges Gloukoviezoff
• G2 Research
• ONPES

2
To understand overindebtedness

• A need of credit
• Social necessity and lack of alternatives
• Borrower decision
• Skills and situation
• Lender products
• Characteristics and advice
• Overindebtedness occurs
• When credit is not the right solution
• When characteristic of the credit are
  inappropriate

3
When the situation is problematic

• Main lenders can fail
• Assessment by scoring only
• Microcredit strengths
• Borrowers global situation taken into account
• Personalised pedagogy
• Better results
• Refusal understood by borrower
• If needed, debt consolidation is made in the
  interest of the borrower

4
When the credit is the problem

• Main lenders credit can be inappropriate
• Credit limits are too high
• Interest rates are too high
• When difficulties occur, fees are too high
• Microcredit strengths
• Amount lent is related to the need
• When difficulties occur, personalised adaptation
  can be made
• When repayment becomes impossible, guarantee fund
  reduces the debt

5
A microcredit at risk

• To stay marginal and a communication tool
• CSR approach
• To become a market-based social welfare program
• Poorest can protect themselves by themselves
• To become a market
• Microcredit will have to be profitable

6
An emergency and RD tool

• To face appropriately financial needs in
  emergency
• To highlight unsatisfied financial needs
• Lenders Better access to appropriate credit
• Third sector Better skilled social workers and
  volunteers in NGO
• State Better access to social welfare program
• Need for regulation
• Microcredit is a complement to main lenders
• Assessment in relation with financial inclusion
  goals
• Incentive for stakeholder