Reducing Inequality in Developing Countries Through Microfinance: Any Correlation So Far?

Richardson Kojo Edeme, Nelson C. Nkalu

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Even though microfinance is expected to significantly affect macro variables such as inequality, poverty, and human development, there has not been enough empirical study on the impact analysis at the macro level, such as the effect of microfinance on inequality, especially in developing countries of Africa. This chapter, therefore, provides a detailed empirical analysis of the correlation between microfinance and inequality in West Africa sub-region. The correlation coefficient shows that although there is a positive linear connection between the possibilities of microfinance to reduce inequality; it has not contributed significantly to poverty reduction with the independent variables. The findings further suggest that the most robust explanatory variables for inequality reduction are GDP per capita and democracy which are invariably significant with positive sign. Taken together, these findings reinforce the intuition that greater democracy and provision and expansion of financial infrastructures especially in backward countries of the region are necessary for microfinance to thrive and contribute abundantly to inequality reduction.
Original languageEnglish
Title of host publicationHandbook of Research on Microfinancial Impacts on Women Empowerment, Poverty, and Inequality
EditorsRamesh Chandra Das
Publisher IGI Global
Chapter14
Number of pages21
ISBN (Electronic)9781522552413
ISBN (Print)9781522552406, 1522552405
DOIs
Publication statusPublished - 2019

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