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Measuring the Impact of Agricultural Finance on Rural Inequality: Evidence from Egypt

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  • Heba Farida Ahmed Fathy El-laithy
  • Ahmed Rostom
  • Lamia Donia

Abstract

Evidence suggests that financial development and improved access to credit not only accelerates economic growth, but also reduces household poverty and income inequality. Using Egyptian household survey data evidence it is found that a 1% increase in agricultural wages causes poverty to decline by 6.6%. Agricultural wage increases lead to the largest decrease in overall income inequality where a 1% increase in income from agriculture wages will cause overall inequality to fall by 0.049 percentage points: equivalent to a fall in the Gini coefficient by 18.8%. A regression analysis shows that receiving formal loans increases non-agricultural net revenues by 2.94 times whereas credit increases a household’s agriculture revenues by 2.08 times.

Suggested Citation

  • Heba Farida Ahmed Fathy El-laithy & Ahmed Rostom & Lamia Donia, 2017. "Measuring the Impact of Agricultural Finance on Rural Inequality: Evidence from Egypt," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 18(1), pages 59-106, January.
    • Handle: RePEc:wej:wldecn:660
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