Aid, Microfinance and income inequality: A global view

This article studies the relationship between foreign aid and microfinance flows and income inequality. Using a broad theoretical framework on inequality, and panel data for 87 countries from 1995 to 2012, we study the dynamics of aid and microfinance and how these relate to income inequality. Our results highlight important differences across world regions and the need to consider specificities of the context when assessing the impact of both aid and microfinance on inequality. In this line, we provide an analysis for three different countries: Bolivia, Bangladesh, and Indonesia.