The European microfinance sector has been consistently growing over the past decade. It is composed of a variety of players and business models, with diverging legal and institutional frameworks across Europe. As a consequence, lending practices in microfinance vary considerably depending on:
- the type of institution providing microloans
- its legal setup
- the environment in which it operates
- and its own ability to apply sound and efficient management procedures
Given the diversity of the microfinance sector, the implementation of a voluntary European Code of Good Conduct for Microcredit Provision is an important element to promote best practices within the sector. The Code is a self-regulation instrument developed in close consultation with key stakeholders. It serves as a quality label, upholding high ethical and responsible lending practices in the European microfinance sector.
Signing up to or endorsing the Code is a pre-condition for accessing EU funding under the EaSI financial instruments.