Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/259669 
Year of Publication: 
2022
Citation: 
[Journal:] Journal of Innovation and Entrepreneurship [ISSN:] 2192-5372 [Volume:] 11 [Issue:] 1 [Article No.:] 7 [Publisher:] Springer [Place:] Heidelberg [Year:] 2022 [Pages:] 1-15
Publisher: 
Springer, Heidelberg
Abstract: 
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.
Subjects: 
Income inequality
Instrumental variables
Loan portfolio
Macro-level analysis
Microfinance
JEL: 
C31
G21
I32
O15
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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