Finance as a Common: From Environmental Management to Microfinance and Back

Abstract

Purpose

This chapter aims to use the theory of commons to reflect on the mechanisms that supported the recent (micro)financial crisis. This approach naturally extends the analysis of the growing field of green microfinance and the financialization of commons and in particular the environment.

Methodology/approach

The study provides a theoretical analysis of the recent crisis and the introduction of the environmental dimension to microfinance. This theoretical analysis is supported by extensive experience in many years of field research and qualitative and quantitative analysis of the (micro)financial crisis and green microfinance. The theoretical analysis is based on the results of previous research developed using primary and secondary data.

Findings

Using the theory of commons we interpret the recent crisis and the financialization of the environment as the tragedy of commons.

We highlight that when the private profit prevails over community benefit, both at the financial and environmental level, efforts toward financial inclusion and environmental conservation could instead lead to financial crisis and environmental damage.

Research implications

Financial inclusion and environmental economy cannot be analyzed simply in terms of economic utility; a systemic view that embraces the complexity of poverty and the human–environment system is required to assess the actual outcomes of programs dealing with financial inclusion.

Practical/social implications

Policymakers, international agencies, and implementing institutions such as financial intermediary institutions should question an oversimplistic view of financial inclusion and the economic value of environmental goods. They should instead include in their analysis and program design considerations of the complex interactions between actors, collective behavior, and emerging properties of human and environmental systems.

Originality/value

The theory of commons is employed to analyze both financial inclusion and green microfinance. We propose that (micro)finance should be understood and managed as a common good to support the development of a socially, economically, and environmentally sustainable financial system.

Citation

Forcella, D. and Servet, J.-M. (2016), "Finance as a Common: From Environmental Management to Microfinance and Back", Finance and Economy for Society: Integrating Sustainability (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 199-221. https://doi.org/10.1108/S2043-905920160000011017