Income inequality, financial flows and political institution: sub-Saharan African financial network

John Inekwe, Yi Jin and Maria Rebecca Valenzuela
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Yi Jin: Southwestern University of Finance and Economics
Maria Rebecca Valenzuela: Queensland Productivity Commission, Centre for Efficiency and Productivity Analysis, University of Queensland

Empirical Economics, 2020, vol. 58, issue 6, No 3, 2635-2665

Abstract: Abstract Using firm-level loan contracts, we generate aggregate measures of financial connections and examine how these indices relate to income inequality in sub-Saharan African (SSA) countries. The results reveal that more connectedness is not beneficial for these economies as shown by the degree and the eigenvector indices. Betweenness centrality worsens income inequality such that the act of intermediation in the provision of financing remains detrimental to net and market income inequalities. Independent access to funding has no significant effect on income inequality. While accounting for the influence of political instability, the results reveal that financial connectedness is beneficial in reducing income inequality.

Keywords: SSA economy; Financial networks; Institutions; Income inequality (search for similar items in EconPapers)
JEL-codes: D31 F21 F36 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s00181-019-01634-3

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