IDEAS home Printed from https://ideas.repec.org/p/guc/wpaper/30.html
   My bibliography  Save this paper

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

Author

Listed:
  • Heiko Fritz

    (Faculty of Management Technology, The German University in Cairo)

  • Guenter Lang

    (Faculty of Management Technology, The German University in Cairo)

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.

Suggested Citation

  • Heiko Fritz & Guenter Lang, 2012. "Microcredit, Human Capital, and Personal Income Distribution: Empirical Evidence from Greater Cairo," Working Papers 30, The German University in Cairo, Faculty of Management Technology.
    • Handle: RePEc:guc:wpaper:30
    as

    Download full text from publisher

    File URL: http://mgt.guc.edu.eg/wpapers/030fritz_lang2012.pdf
    File Function: First version, 2012
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
    2. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    3. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    4. Ahlin, Christian & Jiang, Neville, 2008. "Can micro-credit bring development?," Journal of Development Economics, Elsevier, vol. 86(1), pages 1-21, April.
    5. James Copestake, 2002. "Inequality and the polarizing impact of microcredit: evidence from Zambia's copperbelt," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(6), pages 743-755.
    6. Xavier Giné & Pamela Jakiela & Dean Karlan & Jonathan Morduch, 2010. "Microfinance Games," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 60-95, July.
    7. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    8. Nguyen, Cuong & Bigman, David & Van den Berg, Marrit & Vu, Thieu, 2007. "Impact of Micro-credit on Poverty and Inequality: The Case of the Vietnam Bank for Social Policies," MPRA Paper 54154, University Library of Munich, Germany.
    9. Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 423-423.
    10. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
    11. Shahidur R. Khandker, 2005. "Microfinance and Poverty: Evidence Using Panel Data from Bangladesh," The World Bank Economic Review, World Bank, vol. 19(2), pages 263-286.
    12. Emmanuel Jimenez & Harry Anthony Patrinos, 2009. "Can Cost–Benefit Analysis Guide Education Policy in Developing Countries?," Chapters, in: Robert J. Brent (ed.), Handbook of Research on Cost–Benefit Analysis, chapter 4, Edward Elgar Publishing.
    13. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
    14. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2007. "Finance, inequality and the poor," Journal of Economic Growth, Springer, vol. 12(1), pages 27-49, March.
    15. Hisako, KAI & Shigeyuki, HAMORI, 2009. "Microfinance and Inequality," MPRA Paper 17537, University Library of Munich, Germany.
    16. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    17. Coleman, Brett E., 1999. "The impact of group lending in Northeast Thailand," Journal of Development Economics, Elsevier, vol. 60(1), pages 105-141, October.
    18. Coleman, Brett E., 2006. "Microfinance in Northeast Thailand: Who benefits and how much?," World Development, Elsevier, vol. 34(9), pages 1612-1638, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hisaki KONO & Kazushi TAKAHASHI, 2010. "Microfinance Revolution: Its Effects, Innovations, And Challenges," The Developing Economies, Institute of Developing Economies, vol. 48(1), pages 15-73, March.
    2. Swain, Ranjula Bali & Varghese, Adel, 2009. "Does Self Help Group Participation Lead to Asset Creation?," World Development, Elsevier, vol. 37(10), pages 1674-1682, October.
    3. Asli Demirgüç-Kunt & Ross Levine, 2009. "Finance and Inequality: Theory and Evidence," Annual Review of Financial Economics, Annual Reviews, vol. 1(1), pages 287-318, November.
    4. Gutiérrez-Nieto, Begoña & Serrano-Cinca, Carlos, 2019. "20 years of research in microfinance: An information management approach," International Journal of Information Management, Elsevier, vol. 47(C), pages 183-197.
    5. Chliova, Myrto & Brinckmann, Jan & Rosenbusch, Nina, 2015. "Is microcredit a blessing for the poor? A meta-analysis examining development outcomes and contextual considerations," Journal of Business Venturing, Elsevier, vol. 30(3), pages 467-487.
    6. Anzoategui, Diego & Demirgüç-Kunt, Asli & Martínez Pería, María Soledad, 2014. "Remittances and Financial Inclusion: Evidence from El Salvador," World Development, Elsevier, vol. 54(C), pages 338-349.
    7. Karlan, Dean & Morduch, Jonathan, 2010. "Access to Finance," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4703-4784, Elsevier.
    8. B. Mak Arvin & Byron Lew (ed.), 2015. "Handbook on the Economics of Foreign Aid," Books, Edward Elgar Publishing, number 15762.
    9. João Pedro W. de Azevedo, 2004. "Entrepreneurship And Liquidity Constraints In Deprived Areas: Evidence From The Slums Of Rio De Janeiro," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32nd Brazilian Economics Meeting] 135, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    10. Martijn Boermans & Daan Willebrands, 2012. "Financial constraints, risk taking and firm performance: Recent evidence from microfinance clients in Tanzania," DNB Working Papers 358, Netherlands Central Bank, Research Department.
    11. Schultz, T. Paul, 2009. "The Gender and Generational Consequences of the Demographic Transition and Population Policy: An Assessment of the Micro and Macro Linkages," Working Papers 71, Yale University, Department of Economics.
    12. Emanuela di Gropello, 2006. "Meeting the Challenges of Secondary Education in Latin America and East Asia : Improving Efficiency and Resource Mobilization," World Bank Publications - Books, The World Bank Group, number 7173.
    13. Zeng, Jinli & Zhang, Jie, 2022. "Education policies and development with threshold human capital externalities," Economic Modelling, Elsevier, vol. 108(C).
    14. Kai Carstensen & Erich Gundlach & Susanne Hartmann, 2009. "The Augmented Solow Model with Mincerian Schooling and Externalities," German Economic Review, Verein für Socialpolitik, vol. 10(4), pages 448-463, November.
    15. Mizunoya, Suguru & Mitra, Sophie & Yamasaki, Izumi, 2018. "Disability and school attendance in 15 low- and middle-income countries," World Development, Elsevier, vol. 104(C), pages 388-403.
    16. Theodore Koutmeridis, 2013. "The Market for "Rough Diamonds": Information, Finance and Wage Inequality," CDMA Working Paper Series 201307, Centre for Dynamic Macroeconomic Analysis, revised 14 Oct 2013.
    17. Kamel Bel Hadj Miled & Moheddine Younsi & Monia Landolsi, 2022. "Does microfinance program innovation reduce income inequality? Cross-country and panel data analysis," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-15, December.
    18. Pritha Dev & Blessing U. Mberu & Roland Pongou, 2016. "Ethnic Inequality: Theory and Evidence from Formal Education in Nigeria," Economic Development and Cultural Change, University of Chicago Press, vol. 64(4), pages 603-660.
    19. Gregorio Caetano & Miguel Palacios & Harry A. Patrinos, 2019. "Measuring Aversion to Debt: An Experiment Among Student Loan Candidates," Journal of Family and Economic Issues, Springer, vol. 40(1), pages 117-131, March.
    20. Flabbi, Luca & Paternostro, Stefano & Tiongson, Erwin R., 2008. "Returns to education in the economic transition: A systematic assessment using comparable data," Economics of Education Review, Elsevier, vol. 27(6), pages 724-740, December.

    More about this item

    Keywords

    Microfinance; Impact of Microcredit; Inequality; Earnings Function;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:guc:wpaper:30. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr.Dina Yousri (email available below). General contact details of provider: https://edirc.repec.org/data/fmguceg.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.