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Control of corruption, microfinance, and income inequality in MENA countries: evidence from panel data

Authors
  • Lassoued, Mongi1
  • 1 University of Sousse, Street of 18 January 1952, Sousse, Tunisia , Sousse (Tunisia)
Type
Published Article
Journal
SN Business & Economics
Publisher
Springer International Publishing
Publication Date
Jul 07, 2021
Volume
1
Issue
7
Identifiers
DOI: 10.1007/s43546-021-00099-w
Source
Springer Nature
Keywords
Disciplines
  • Original Article
License
Yellow

Abstract

There has been a reduction in income inequality in the MENA region along with a dramatic deterioration in control corruption. In this regard, microfinance appears to be a potential factor that could contribute to reducing these inequalities in such region. This paper contributes to the literature in an attempt to understand the key role of microfinance and control of corruption in reducing income inequality in MENA countries using a panel data covering the period 1996–2018. To examine the relationships, the paper applies several estimation techniques, which are the generalized least squares (GLS) method, fixed effects model (FE) and the system-generalized method of moments (GMM). Our empirical results indicate that higher level of microcredit and lower level of corruption associate with lesser income inequality, and therefore, reduce the income gap between the poor and the rich. Results also show that the development of microfinance in MENA countries is the solution to facilitate the access of vulnerable groups to microcredit.

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