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Microcredit regulation in Europe: An overview (2023)

Publication Regulatory reports

Along with the evolution of microcredit over the last 20 years, the legislation on microcredit activities has formalised the presence of non-bank microfinance institutions (non-bank MFIs) in the market. In contrast to banks, non-bank MFIs are the primary microcredit providers in Europe, and they are not obligated to comply with full banking requirements to offer loans. Their main target clients are primarily excluded from the banking system and therefore non-bank MFIs play a key role in promoting financial inclusion. However, what is the current legislation for non-bank MFIs in Europe?

This paper examines the various legislative frameworks adopted in Europe. For EMN, this is part of a larger learning process that will help to identify regulatory approaches that are more conducive to the development of the sector. This is key to help policymakers improve their own framework, capturing the specificities of microcredit that EMN advocates for, based on EU good practices. For microfinance practitioners, this paper can be a practical tool to compare their context with that of their peers across Europe and engage in discussion with policymakers on regulatory issues.

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