Impact of Microfinance on Poverty and Inequality A Heterogeneous Panel Causality Analysis

Abstract

This paper studies the impact of microfinance on poverty by analyzing the causal links between the intensity of microfinance and poverty and inequality indicators (Gini and poverty measures). We use heterogeneous panel causality techniques on a sample of 52 developing countries over the period 1996-2011. The results of this macroeconomic analysis show that the access to microcredit through the increase in the number of active borrowers improves the income of the poor and leads to a reduction in inequality. We also observe a link between the Gini index and the level of individual loans.