Microcredit for enterprise in the UK as an ‘alternative’ economic space

Neil McHugh*, Rachel Baker, Cam Donaldson

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

One response to the major societal challenge of financial exclusion in the United Kingdom (UK) is microcredit lending for enterprise. Typically delivered via Community Development Finance Institutions (CDFIs) in the UK, these lending institutions can be conceptualised as ‘alternative’ economic spaces. Yet the nature of their alterity is unclear as categorisations of alternative-oppositional or alternative-substitute institutions are possible and could also be influenced by complexities in the UK relating to the welfare system and sustainability. Alterity is rarely static, being influenced by policies and regulation, and the nature of institutions’ alterity could have consequences for wellbeing, as different values and ideals underpin different conceptions of alterity which affect how these institutions operate. In this paper, the complexities of microcredit for enterprise lending within the UK are explored through in-depth interviews with UK ‘supply-side’ stakeholders. Conceptions of alterity are then used as an analytic lens to examine these results. Results suggest that these lenders remain in opposition to the mainstream as the needs of low-income individuals are embedded within their operating model. Microcredit lending is conceptualised in terms of responsible lenders offering fair credit to financially-excluded individuals using relationship banking practices. Such a conceptualisation provides a touchstone against which to assess shifts in lenders’ alterity and a platform from which to introduce legislative and regulatory changes to protect these ‘alternative-oppositional’ economic spaces. This paper begins to outline these responses that could help to ensure and grow a more community-engaged and varied local financial infrastructure within the UK.
Original languageEnglish
Pages (from-to)80-88
Number of pages9
JournalGeoforum
Volume100
Early online date18 Feb 2019
DOIs
Publication statusPublished - Mar 2019

Keywords

  • alternative economic spaces; microcredit; enterprise; financial exclusion; UK; qualitative interviews

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