MICROFINANCE, FINANCIAL DEVELOPMENT, FOREIGN AID, AND INCOME INEQUALITY: EVIDENCE FROM SUB-SAHARAN AFRICA

This paper examines the effects of microfinance, financial development and foreign aid on income inequality for 43 Sub-Saharan African (SSA) countries. Panel data period 1995–2015 is examined using fixed effects, pooled ordinary least square system generalized method moments (GMM) estimation techniques. Findings suggest that although plays a determining role in explaining dynamics SSA, it does not appear to be pro-poor. Moreover, results reveal both microfinance contribute narrowing gap between poor rich reducing inequality. implies providing access loans through institutions or bank-based offer potential income-generating activities. Furthermore, empirical evidence suggests GDP per capita growth government expenditures While rapid population growth, high levels inflation, FDI trade openness are correlated, positively significantly, with greater These have important policy implications SSA. Enhancing efficiency social protection, promoting progressive taxation distributional effectiveness fiscal crucial address inequalities.Keywords: Income inequality, Microfinance, Financial development, Foreign aid, Africa JEL Classifications: C23; D63; F35; O55DOI: https://doi.org/10.32479/ijefi.11277