Does microfinance affect income inequality?

  title={Does microfinance affect income inequality?},
  author={Niels Hermes},
  journal={Applied Economics},
  pages={1021 - 1034}
  • N. Hermes
  • Published 28 January 2014
  • Economics
  • Applied Economics
This study addresses the question whether participation of the poor in microfinance contributes to reducing a country’s level of income inequality. Using data from 70 developing countries, we show that higher levels of microfinance participation are indeed associated with a reduction of the income gap between rich and poor people. We also show, however, that the effects of microfinance on reducing income inequality are relatively small. The results of this study add to the discussion on the… 

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