Financial Openness and Income Inequality: Do Institutions matter for Africa?

Samouel Beji ()
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Samouel Beji: MoFID-University of Sousse (Tunisia)

Economics Bulletin, 2019, vol. 39, issue 1, 104-114

Abstract: There has been little empirical literature on the relationship between financial openness and income inequality in Africa. Using a panel threshold estimation technique we examine whether the effect of financial openness on income inequality is dependent to the institutional quality. We adopt the methodology proposed by Hansen (1999) on a panel dataset of 21 African countries over the period 1985-2014. Our results confirm the existence of a two-regime split. In fact, financial openness seems to significantly widen the income inequality in countries with low level of institutional quality while it does not have a significant effect in countries with relatively high institutional quality. These results concur with a well-established literature and demonstrate that financial openness-income inequality link is contingent on the quality of the political and institutional environment in the African countries.

Keywords: Financial Openness; Income Inequality; Threshold Panel Regression (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2019-01-13
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Citations: View citations in EconPapers (1)

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