Intended and unintended effects of specialized regulation on microfinance institutions’ double‐bottom line management

Enrico Bellazzecca*, Olga Biosca Artinano

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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Taking advantage of the passage of a microfinance law in Italy (2014), we explore the rationales for introducing microfinance-specific regulation in high-income welfare states and the potential effects that this process may have on MFIs’ social and financial performances (i.e. double bottom line). Our findings suggest that the institutional transformation of MFIs, in addition to product design and target group required by the new regulation, has unintendedly shifted their balance in favor of financial over social performance. This mainly applies to non-profit organizations and cooperatives. Microfinance-specific regulation in high-income welfare states may reflect the emerging trends of market-based rationality of public policy. When regulatory arrangements for MFIs are stipulated irrespectively of MFIs’ original mission the structural causes of financial exclusion may be reinforced. The underlying rationales for this trade-off should be considered to prevent and mitigate the unintended effects of microfinance-specific regulation.
Original languageEnglish
Pages (from-to)977-999
Number of pages23
JournalAnnals of Public and Cooperative Economics
Issue number4
Early online date20 Nov 2021
Publication statusPublished - Dec 2022


  • regulation
  • microfinance
  • Europe
  • hybrid organizations
  • welfare state
  • social performance
  • microfinance regulation
  • financial performance
  • institutional transformation
  • financial service
  • market failure
  • systemic risk

ASJC Scopus subject areas

  • Economics and Econometrics
  • Sociology and Political Science


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