Contextualizing Microcredit in Bosnia-Herzegovina and Hungary: A Focus Group Exploration

Abstract

: Microfinance is gaining importance as a tool to reduce poverty and promote financial and social inclusion. The main goal of the paper is to analyze the role of microcredit to solve the problem of the credit access to vulnerable people. The paper focuses on the direct experience of people who have used microcredit living in Bosnia-Herzegovina and Hungary to analyze the use of microcredit in these areas. From the methodological point of view, the research uses focus groups to investigate on customer relations with the banking system, microcredit, social and financial exclusion, and possible alternatives to microcredit. In this way, it is possible to analyze mechanisms through which the involvement in microcredit operations results in positive (and negative) effects on people's lives. Results show that microcredit is a great opportunity to facilitate employment, create jobs, increase productivity, improve living conditions promote social integration. Results show that services of mentoring and coaching improve entrepreneurship skills or vocational (technical) know-how. These services help to improve access to finance for vulnerable individuals and to support better living conditions. We identify current good practices among microfinance services to understand the future potential role of microcredit propose concrete in particular areas.