Mitigating regional disparities through microfinancing: an analysis of microcredit as a sustainability tool for territorial development in Italy

Despite the rapid growth of the sector, academic research on microcredit programs is still limited. In the economic development literature, the prevailing thesis is that the inadequate regulatory context is the main factor that explains the untapped potential of microfinance industry in developed economies. In this context, this paper proposes the use of microcredit not only in order to achieve social inclusion, but also above all to promote the socioeconomic development of a territory, according to sustainable development principles. Thus, the study meets the need to rebalance a territory through a stable programming approach. This research uses a multi-objective programming model, as it allows better representation of decision problems, describing the impacts on the pursued objectives, and finding a solution for reaching the best possible compromise among them. The paper sets out to examine the economic benefits of a microcredit proposal in relation to a specific project for the development of the female entrepreneurship in an Italian region. The findings reveal that multi-objective methods allow evaluating the impacts on the objectives associated to the chosen solution, to compare them with those associable to different solutions, and, finally, to reach the best compromise possible among the pursued objectives, according to external and internal constraints established by policy makers.