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The Role of Institutions in the Finance-Inequality Nexus in Sub-Saharan Africa

Ngozi Adeleye, Evans Osabuohien () and Ebenezer Bowale

Journal of Contextual Economics (JCE) – Schmollers Jahrbuch, 2017, vol. 137, issue 1-2, 173-192

Abstract: This study contributes to the literature on income inequality by providing evidence that financial development not only impacts income distribution, but the effects can improve when there is a strong institutional framework. Using the system-generalised method of moments (sys-GMM) technique on a sample of 42 Sub-Saharan African (SSA) countries from 1996 to 2015, our major findings are summarised as follows: (1) inequality is persistent in the region (2) financial development does not significantly reduce income inequality; and (3) the control of corruption and its interaction with domestic credit exhibit an inverted-U relation with income inequality. Thus, policies that will reduce income inequality require that corruption be controlled given increase in domestic credit.

JEL-codes: F36 G21 O15 (search for similar items in EconPapers)
Date: 2017
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Journal of Contextual Economics (JCE) – Schmollers Jahrbuch is currently edited by Peter J. Boettke, Nils Goldschmidt, Stefan Kolev, Stephen T. Ziliak and Joachim Zweynert

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Handle: RePEc:dah:aeqjce:v137_y2017_i1-2_q1-2_p173-192