Financial Development and Income Inequality: Evidence from African Countries

Michael Batuo, Francesco Guidi and Kupukile Mlambo

MPRA Paper from University Library of Munich, Germany

Abstract: This paper present empirical evidence on how financial development is related to income distribution in a panel data set covering 22 African countries for the period between 1990 to 2004. A dynamic panel estimation technique (GMM) is employ and the findings indicate that income inequality decrease as economies develop their financial sector, which is consistent with the bulk of theoretical and empirical research. The result also confirm that educational attainment play a significant role in making income distribution more equal. We also find no evidence supporting the Greenwood-Jovanovic hypothesis of an inverted-U- shaped relationship between financial sector development and inequality.

Keywords: Financial development; income inequality; Africa G20; D63; 055 (search for similar items in EconPapers)
JEL-codes: D63 G2 O55 (search for similar items in EconPapers)
Date: 2010-08
New Economics Papers: this item is included in nep-afr
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Citations: View citations in EconPapers (146)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:25658

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