Reducing inequality in developing countries throughMicrofinance, Any-correlation so far

Even though microfinance is expected to significantly affect macro variables such as inequality, poverty,

and human development, there has not been enough empirical study on the impact analysis at the macro

level, such as the effect of microfinance on inequality, especially in developing countries of Africa. This

chapter, therefore, provides a detailed empirical analysis of the correlation between microfinance and

inequality in West Africa sub-region. The correlation coefficient shows that although there is a positive

linear connection between the possibilities of microfinance to reduce inequality; it has not contributed

significantly to poverty reduction with the independent variables. The findings further suggest that the

most robust explanatory variables for inequality reduction are GDP per capita and democracy which are

invariably significant with positive sign. Taken together, these findings reinforce the intuition that greater

democracy and provision and expansion of financial infrastructures especially in backward countries of

the region are necessary for microfinance to thrive and contribute abundantly to inequality reduction.

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