Revisiting the finance-inequality nexus in a panel of African countries

Christelle Meniago and Simplice Asongu

Research in International Business and Finance, 2018, vol. 46, issue C, 399-419

Abstract: The study assesses the role of financial development on income inequality in a panel of 48 African countries for the period 1996–2014. Financial development is defined in terms of depth (money supply and liquid liabilities), efficiency (from banking and financial system perspectives), activity (at banking and financial system levels) and stability while, three indicators of inequality are used, namely, the: Gini coefficient, Atkinson index and Palma ratio. The empirical evidence is based on Generalised Method of Moments. When financial sector development indicators are used exclusively as strictly exogenous variables in the identification process, it is broadly established that with the exception of financial stability, access to credit (or financial activity) and intermediation efficiency have favourable income redistributive effects. The findings are robust to the: control for unobserved heterogeneity in terms of time effects and inclusion of time invariant variables as strictly exogenous variables in the identification process. The findings are also robust to the Kuznets hypothesis: an inverted humped shaped nexus between increasing GDP per capita and inequality. Policy implications are discussed.

Keywords: Africa; Finance; Inequality; Poverty (search for similar items in EconPapers)
JEL-codes: D60 E25 G20 I30 O55 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (245)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0275531917309054
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Revisiting the Finance-Inequality Nexus in a Panel of African Countries (2018)
Working Paper: Revisiting the Finance-Inequality Nexus in a Panel of African Countries (2018)
Working Paper: Revisiting the Finance-Inequality Nexus in a Panel of African Countries (2018)
Working Paper: Revisiting The Finance-Inequality Nexus in a Panel of African Countries (2018)
Working Paper: Revisiting The Finance-Inequality Nexus in a Panel of African Countries (2018)
Working Paper: Revisiting the Finance-Inequality Nexus in a Panel of African Countries (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:46:y:2018:i:c:p:399-419

DOI: 10.1016/j.ribaf.2018.04.012

Access Statistics for this article

Research in International Business and Finance is currently edited by T. Lagoarde Segot

More articles in Research in International Business and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().