Microcredit, Human Capital, and Personal Income Distribution: Empirical Evidence from Greater Cairo
AbstractProviding the poor access to finance, microcredit is supposed to alleviate poverty and can be expected to reduce income inequality in developing countries. Drawing on a primary survey of 670 borrower households in Cairo in 2010, we run a number of cross-sectional regressions and simulations to assess the actual impact of microcredit. The paper yields three main findings. First, microloans have a clear positive impact on earnings. Second, the earning potential of male borrowers is significantly higher than of female borrowers which may be attributed to different levels of human capital. Third, microcredits increase income inequality in the population of borrowers as relatively rich borrowers disproportionally gain from improved access to finance.
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Bibliographic InfoPaper provided by The German University in Cairo, Faculty of Management Technology in its series Working Papers with number 30.
Length: 19 pages
Date of creation: May 2012
Date of revision:
Microfinance; Impact of Microcredit; Inequality; Earnings Function;
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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