The effect of microfinance on income inequality: perspective of developing countries

Ali, Israa Ali Mahmoud; Ghoneim, Hebatallah

doi:10.22367/jem.2019.35.03

Cited by 5 publications

(3 citation statements)

References 23 publications

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“…The results corroborate the studies of Mahjabeen (2008), Kai and Hamori (2009), Tchouassi (2011), Bangoura et al (2016, and Lacalle-Calderon et al ( 2019). Yet, our empirical results are inconsistent with the findings of Hermes (2014), Arif et al (2019), Ali andGhoneim (2019), andCastells-Quintana et al (2019), suggesting providing financial access to the poor cannot reduce the level of income inequality.…”

Section: Empirical Results and Discussioncontrasting

confidence: 99%

“…Arif et al (2019) examined the effect of microfinance on poverty reduction and inequality for 33 provinces in Indonesia from 2011 to 2016 and found that higher level of microfinance significantly reduces poverty but it cannot be done to reduce income inequality. Using cross-country analysis data for 30 developing countries from 2013 to 2015, Ali and Ghoneim (2019) analyzed the effect of microfinance on income inequality by including two different measures of microfinance intensity, that is, the number of active borrowers and the value of microfinance loans. Their empirical results revealed that both measures of microfinance are still too weak to reduce income inequality.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Although there are various success stories of microfinance, it has been the subject of many criticisms that have sparked an important debate among academics and practitioners about its influence and sustainability (Ali & Ghoneim, 2019;Banerjee & Newman, 1993;Castells-Quintana et al, 2019;Cull et al, 2011;Dabla-Norris et al, 2015;Ghosh, 2013;Hermes, 2014). The link between microfinance and income inequality still remain controversial as the true relationship has not been identified.…”

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confidence: 99%

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Does microfinance program innovation reduce income inequality? Cross-country and panel data analysis

2022

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This paper uses cross-country and panel data set to test the significance of microfinance on income inequality reduction at the macro level for a sample of 57 developing countries for the periods 2000–2006 and 2007–2013. This study adopts panel data methodologies, such as ordinary least square (OLS), pooled ordinary least square (POLS) and instrumental variables (IV) estimations to overcome the endogeneity problems among the variables. Empirical results show that countries with higher MFIs’ gross loan portfolio per capita tend to have lower income inequality, which confirm the beneficial outcome of microfinance in reducing inequality at the macro level. Moreover, our results suggest that microfinance loans can lead to improve the relative income position of the poor in developing countries, albeit slowly. Our findings have relevant recommendations to policymakers, as they could generate suitable strategies to consider microfinance institutions as a more popular tool for fighting against both poverty and inequality.

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Section: Empirical Results and Discussioncontrasting

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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confidence: 99%

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Does microfinance program innovation reduce income inequality? Cross-country and panel data analysis

2022

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Control of corruption, microfinance, and income inequality in MENA countries: evidence from panel data

Lassoued

2021

SN Bus Econ

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There has been a reduction in income inequality in the MENA region along with a dramatic deterioration in control corruption. In this regard, microfinance appears to be a potential factor that could contribute to reducing these inequalities in such region. This paper contributes to the literature in an attempt to understand the key role of microfinance and control of corruption in reducing income inequality in MENA countries using a panel data covering the period 1996-2018. To examine the relationships, the paper applies several estimation techniques, which are the generalized least squares (GLS) method, fixed effects model (FE) and the system-generalized method of moments (GMM). Our empirical results indicate that higher level of microcredit and lower level of corruption associate with lesser income inequality, and therefore, reduce the income gap between the poor and the rich. Results also show that the development of microfinance in MENA countries is the solution to facilitate the access of vulnerable groups to microcredit.

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The Impact of Microfinance on Poverty and Income Inequality

Lee,

Miller,

Tippit

2023

JID

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It is generally accepted in the academic literature that economic growth, global free trade and the development of financial services are the main factors that affect poverty and income inequality in emerging market nations. However, there is currently no conclusive evidence to show how social impact investing through the use of microfinance institutions (MFIs) affects poverty and income inequality. This paper examines the impact of MFI outreach after controlling for economic growth, economic development, and the development of financial services. We find that even after controlling for these factors, MFIs can provide an additional reduction in both poverty and income inequality.

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The effect of microfinance on income inequality: perspective of developing countries

Cited by 5 publications

References 23 publications

Does microfinance program innovation reduce income inequality? Cross-country and panel data analysis

Does microfinance program innovation reduce income inequality? Cross-country and panel data analysis

Control of corruption, microfinance, and income inequality in MENA countries: evidence from panel data

The Impact of Microfinance on Poverty and Income Inequality

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