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Microcredit, Human Capital, and Personal Income Distribution: Empirical Evidence from Greater Cairo

Heiko Fritz () and Günter Lang ()

No 30, Working Papers from The German University in Cairo, Faculty of Management Technology

Abstract: Providing 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.

Keywords: Microfinance; Impact of Microcredit; Inequality; Earnings Function (search for similar items in EconPapers)
JEL-codes: G21 O15 O16 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012-05
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http://mgt.guc.edu.eg/wpapers/030fritz_lang2012.pdf First version, 2012 (application/pdf)

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