Microcredit repayment in a European context: evidence from Portugal

• The high level of microcredit repayment is confirmed in the studied context (Portugal). • Microcredit appears to be a tool for disadvantaged groups in urban areas more than a solution for people of the poorest regions. • Microcredit may act to facilitate integration of immigrants in the studied context. • Microcredit repayment can be predicted by socio-demographic and loan-related variables. • Economic crisis was of significant influence in microcredit repayment predictors The existing empirical literature on microcredit repayment focuses primarily on explaining its determinants for developing countries. Using a binary logistic regression model, we examine microcredit repayment in Portugal, one of the EU countries hardest hit by the economic recession caused by the 2008 financial crisis. This article widens the focus by examining the determinants of microcredit repayment in a previously unstudied context, examining potential differences between expansion and recession sub-periods and incorporating into the model previously unstudied variables. This study also reveals clear differences between profiles of microcredit borrowers from developing countries and those from a European context.