Global warming continues to have a negative effect on the environment and, by extension, the economy. Incidence of natural disasters are increasing because of climate change, with flooding being one of the most common and costly types of disaster. Studies on the effect of floods on the economy have revealed that flooding increases the amount of income inequality. However, there is not a unified, qualitative analysis of the reasons for the post-flood increase in inequality. This thesis examines multiple different flood events in several developing countries to answer how flooding affects inequality in developing countries. It produces a synthesized analysis on the underlying causes of flood induced income inequality. These causes were found to be the increased vulnerability of low-income households to flooding and their lower capacity to cope with flood damages, relative to middle- or high-income households. Vulnerability has spatial and structural dimensions, and capacity to cope is influenced by a household’s asset portfolio and post-flood adaptation ability; it is also interconnected with coping capacity and contributes to a cycle of poverty escalation.