Breadth and depth of french microfinance outreach : an evaluation

French but also European economies are driven by micro, small and medium enterprises. However, evidence shows that micro-enterprises, representing 99 per cent of all newly created businesses, suffer from a lack of external resources, especially those created by socially excluded persons. Traditional commercial banks are indeed often reluctant to satisfy the demand for credit by poor people who cannot guarantee financial collateral and stable revenues. Microfinance institutions (MFIs), dedicated to persons partially or totally excluded from the banking sector, have therefore developed special lending scheme such as progressive lending or group lending and hence demonstrated that poor people could surprisingly be creditworthy. Although many studies do exist on developing countries' MFIs, few have been done to evaluate the social performance of microfinance programmes in industrialized countries. Considering this, we have developed in this paper an in-depth analysis of French institutions of microfinance and an econometric analysis on the personal and social characteristics of their clients, as a measure of MFIs social performance. We demonstrate that two types of microfinance client may be identified: the first type, mainly unemployed, uses microcredit as additional financing resources to complete a relatively important business plan, whereas the second type, mainly monthly guaranteed benefit income recipients totally excluded from the banking system, more vulnerable, uses microcredit as the only external financial resource available to start up a professional activity.. One of our key results is that being either poor, socially excluded or deprived from banking resources is not a sine qua non condition for accessing microfinance services. We also underline that the probability of default is much higher in the first group of borrowers and is positively