The Effect of Finance on Inequality in Sub-Saharan Africa: Avoidable CO2 emissions Thresholds

Simplice Asongu and Xuan Vo ()
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Xuan Vo: Ho Chi Minh City, Vietnam

No 20/030, Working Papers of the African Governance and Development Institute. from African Governance and Development Institute.

Abstract: There is a glaring concern of income inequality in the light of the post-2015 global development agenda of sustainable development goals (SDGs), especially for countries that are in the south of the Sahara. There are also concerns over the present and future consequences of environmental degradation on development outcomes in sub-Saharan Africa (SSA). This study provides carbon dioxide (CO2) emissions thresholds that should be avoided in the nexus between financial development and income inequality in a panel of 39 countries in SSA over the period 2004-2014. Quantile regressions are used as an empirical strategy. The following findings are established. Financial development unconditionally decreases income inequality with an increasing negative magnitude while the interactions between financial development and CO2 emissions have the opposite effect with an increasing positive magnitude. The underlying nexuses are significant exclusively in the median and top quantiles of the income inequality distribution. CO2 emission thresholds that should not be exceeded in order for financial development to continuously reduce income inequality are 0.222, 0.200 and 0.166 metric tons per capita for the median, 75th quantile and 90th quantile of the income inequality distribution, respectively. Policy implications are discussed with particular relevance to Sustainable Development Goals (SDGs).

Keywords: Renewable energy; Inequality; Finance; Sub-Saharan Africa; Sustainable development (search for similar items in EconPapers)
JEL-codes: H10 O11 O55 Q20 Q30 (search for similar items in EconPapers)
Pages: 30
Date: 2020-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-fdg and nep-sea
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Citations: View citations in EconPapers (5)

Forthcoming: Environmental Science and Pollution Research

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http://www.afridev.org/RePEc/agd/agd-wpaper/The-Ef ... a-CO2-thresholds.pdf Revised version, 2020 (application/pdf)

Related works:
Working Paper: The Effect of Finance on Inequality in Sub-Saharan Africa: Avoidable CO2 emissions Thresholds (2020)
Working Paper: The Effect of Finance on Inequality in Sub-Saharan Africa: Avoidable CO2 emissions Thresholds (2020)
Working Paper: The Effect of Finance on Inequality in Sub-Saharan Africa: Avoidable CO2 emissions Thresholds (2020)
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