Analysis of the Impact of Financial Sector Development on Income Inequality: Evidence from Nigeria, 1980-2012

Isah, Abdulrasheed; Hamzat, Soliu

doi:10.2139/ssrn.3375322

Cited by 3 publications

(3 citation statements)

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“…However, the empirical studies to verify the nexus between financial development and the economy have produced mixed results. Most of the existing studies have focused on the effect of financial development on economic growth, investment, poverty, and inequality (Afolabi, 2022;Bijlsma et al, 2018;Isah & Soliu, 2016;Muyambiri & Odhiambo, 2018;Ni & Liu, 2019;Valickova et al, 2015). More recently, several studies have examined the effect of financial development on unemployment (Ajide, 2020;Bayar, 2016;Ibrahiem & Sameh, 2020;Ogbeide et al, 2016;Raifu, 2019).…”

Section: Introductionmentioning

confidence: 99%

The Effect of Financial Development on Unemployment in Emerging Market Countries

Raifu

Afolabi²

2022

Global Journal of Emerging Market Economies

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This study examined the effect of financial development on unemployment in 19 emerging market countries, considering their age groups and gender dichotomy. The data covers the period from 1991–2019. Pooled Ordinary Least Square (OLS), Dynamic OLS, and quantile regression via moments were employed as the estimation methods. Robustness was tested with Fully Modified OLS and Canonical Cointegration Regression (CCR) estimation methods. Our results show that financial development has a conditional mean reducing effect on unemployment and a reducing effect on the distribution of unemployment. However, the reducing effect of financial development on the distribution of unemployment varies across the working-age population and youths. Thus, there is a need to formulate and implement a long-term financial policy to ensure economic growth and guarantee employment for the working-age population and the youths irrespective of gender.

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Section: Introductionmentioning

confidence: 99%

The Effect of Financial Development on Unemployment in Emerging Market Countries

Raifu

Afolabi²

2022

Global Journal of Emerging Market Economies

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“…Broad reviews of the relationship between financial development and income inequality can be found in Claessens and Perotti (2007), Demirgüç‐Kunt and Levine (2009), Zhuang et al. (2009), Isah and Soliu (2016), and de Haan and Sturm (2017). In addition, a thorough definition and measurement of financial development can be found in King and Levine (1993), Levine (1999), Beck et al.…”

Section: Conflicting Theoretical Predictionsmentioning

confidence: 99%

Financial development and income inequality: A meta‐analysis

Chletsos

Σίντος

2022

Journal of Economic Surveys

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The voluminous empirical research on the effect of financial development on income inequality has yielded mixed results. In this paper, we collect 2127 estimates reported in 116 published studies that investigate the effect of financial development on income inequality. Although our initial tests for publication bias (which do not account for moderator variables) show that the current literature does not suffer from publication selectivity, once we control for a set of moderator variables, we find evidence of mild publication bias in favor of positive estimates (i.e., the current literature favors the publication of studies that find that financial development increases income inequality). In addition, our results suggest that the overall effect of financial development on income inequality is on average zero, but that its sign and magnitude depend systematically on various study characteristics. The characteristics of data and estimation methods, whether endogeneity is taken into account, the different measures of financial development and the inclusion of financial openness, inflation and income variables in the regressions matter significantly for the effect of financial development on inequality.

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“…By performing these functions, financial markets engender capital accumulation and technological innovation that would spur economic growth (Raifu & Afolabi, 2022). Given these theoretical connections between financial development and economic growth, several studies have examined the influence of financial development on economic growth including other areas of the economy such as investment, total factor productivity, sectoral performance, trades, poverty and inequality, even though empirical findings appear to be mixed (Valickova et al, 2015;Isah and Soliu, 2016;Muyambiri and Odhiambo, 2018;Ni and Liu, 2019;Aminu et al, 2019aAminu et al, , 2019bRaifu & Folarin, 2020;Adeboje et al, 2021, Afolabi, 2022.…”

Section: Introductionmentioning

confidence: 99%

Financial Development and Unemployment in MENA: Evidence from Heterogeneous Panel Causality and Quantile via Moment Regression

2023

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The high rate of unemployment is one of the socio-economic problems bedevilling the MENA region. Theoretical and empirical arguments remain divided regarding financial development’s role in addressing unemployment. In light of this, this study investigates the effect of financial development on different components of unemployment (total (adult and youth) and gender (male and female)) in MENA. To capture financial development, we used the IMF composite financial development index. For robustness, we also computed an index of financial development from different measures of financial development made available by the World Bank. These measures of financial development include financial depth, financial efficiency, financial stability and financial access. By the panel quantile via the method of moment (Machado & Silva, 2019 ), our results show that financial development has a significant negative effect on unemployment across the quantiles, but the impact reduces as we move from the lower quantiles to the higher quantiles. Also, using heterogeneous panel causality (Dumitrescu and Hurlin ( 2012 )), our findings are further highlighted as follows: First, in most cases, there is a unidirectional causality between financial development and unemployment, especially total and male unemployment for youths and adults. The direction of causality runs from financial development to unemployment. Therefore, given that financial development lessens the rate of unemployment, our policy implication is that relevant authorities or policymakers need to implement sound financial development initiatives to reduce the levels of unemployment.

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Analysis of the Impact of Financial Sector Development on Income Inequality: Evidence from Nigeria, 1980-2012

Cited by 3 publications

References 71 publications

The Effect of Financial Development on Unemployment in Emerging Market Countries

The Effect of Financial Development on Unemployment in Emerging Market Countries

Financial development and income inequality: A meta‐analysis

Financial Development and Unemployment in MENA: Evidence from Heterogeneous Panel Causality and Quantile via Moment Regression

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