Community Development Finance: A Neo-Market Solution to Social Exclusion?

Financial exclusion is increasingly being recognised as an important aspect of socio-economic inequality where disadvantaged individuals and communities are isolated from mainstream financial services, particularly affordable and readily available credit. In the face of these problems, social policy initiatives have emerged that have travelled under various names: social investment, micro-finance, community finance and community development finance. These initiatives are seen as the basis of a ‘new economics’ that will create self-sustaining local economies. The government is also promoting community development finance as an aspect of community regeneration with the aim of providing credit to poor communities to stimulate local enterprise and thereby reduce dependency on state support. The same approach is being taken to grant-funded community and voluntary organisations to encourage them into a neo-market approach to the delivery of services. This article explores the phenomenon of community development finance and assesses its proposed role in community regeneration and in relation to the community and voluntary sector.