Does microfinance affect poverty reduction and inequality in indonesia?

This study is to discuss the question of whether microfinance (specifically micro-credit) can reduce poverty and income inequality in Indonesia. Using data from 33 provinces in Indonesia, we show that higher levels of micro-credit provision can indeed reduce poverty in Indonesia. However, it turns out that this cannot be done to reduce the income income inequality. The results of this study add to the discussion about the impact of microfinance on poverty and inequality in Indonesia. Because so far micro finance is considered a very effective tool to be applied in an effort to improve people’s welfare by reducing the level of poverty and inequality in Indonesia. Although poverty can decline, but no less important is economic development must be followed by a decrease in the gap between the rich and poor.