Financial inclusion and income inequality nexus: A case of Africa

Kebede, Jeleta; Naranpanawa, Athula; Selvanathan, Saroja

doi:10.1016/j.eap.2022.12.006

Cited by 23 publications

(8 citation statements)

References 60 publications

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“…If the majority of allocation facilitated by the transfer system and the tax, is directed towards those with low incomes, then government consumption may increase equality. However, it could have the opposite effect if it benefits rich households with their political influence (Odusola, 2017; Kebede et al ., 2023). Urbanisation is to be added to define the effect of socio-economic composition on income inequality (Kebede et al ., 2023).…”

Section: Methodology and Datamentioning

confidence: 99%

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The non-linear impact of financial development on income inequality: evidence from dynamic panel threshold model

Sikhawal

2023

JES

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PurposeThis study examines the non-linear impact of financial development on income inequality and analyses the mediators through which financial development affects income inequality.Design/methodology/approachThe study uses a dynamic panel threshold method with an endogeneous threshold variable on a comprehensive sample of 85 countries over the period of 1996-2015.FindingsThe author finds that financial development activities increase income inequality in developed countries. However, financial development promotes income equality in developing countries. Further, the study finds that education and institutional quality are the channels through which financial development has non-linear impacts on income inequality.Originality/valueThe study explores relatively new method to examine the nonlinear impact of financial development and also considers new dataset for the main explanatory variable.

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Section: Methodology and Datamentioning

confidence: 99%

“…However, it could have the opposite effect if it benefits rich households with their political influence (Odusola, 2017; Kebede et al ., 2023). Urbanisation is to be added to define the effect of socio-economic composition on income inequality (Kebede et al ., 2023).…”

Section: Methodology and Datamentioning

confidence: 99%

The non-linear impact of financial development on income inequality: evidence from dynamic panel threshold model

Sikhawal

2023

JES

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“…There is a vast KC literature that covers many different angles and methodological tools. The effect of the financial system on income inequality has been studied allowing for many control variables with differing results, mostly mixed on the impact of financial openness or financial development, see (Johansson and Wang (2014); Ni and Liu (2019); Hasan et al (2020); Mathonnat and Williams (2020); Brei et al (2023); Kebede et al (2023)).…”

Section: Literature Review Of the Kc And Institutional Quality Nexusmentioning

confidence: 99%

A Revisit to Political Institutions and Inequality

DENIZ,

Stengos

2023

Preprint

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This study revisits the drivers of income inequality with political institutions at the core. We take a multidimensional institutional approach by defining political institutions in terms of governance, political freedom, political fragmentation and political scale. The main contributions of our study are (i) presenting the most extensive analysis up-to-date of the role of political institutions by decomposing it into distinct elements and (ii) considering the difficulty and the lack of consensus and clarity regarding the choice of instruments in the literature we define an alternative methodology to deal with the potential endogeneity of political institutions. We combine an analysis of club convergence, a clustering mechanism according to the long term income trajectories of the countries under investigation with Bayesian Model Averaging (BMA) within each cluster to determine the most important variables that affect inequality out of a large set of potentially important variables. Our results show that the effectiveness of political institutions differ among country groups and that there is no "one size fits all" policy prescription that links institutional quality and income inequality.

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“…There is a strong acceptance that financial inclusion is an important driver of economic growth in developing countries (Ofoeda et al ., 2022). Empirical studies support that financial inclusion supports economic growth through credit accessibility, increased savings, increased entrepreneurship, reduced income inequality and poverty (Emara and El Said, 2021; Kebede et al ., 2023; Ofoeda et al ., 2022; Ouechtati, 2020), as well as increasing the effectiveness of monetary policies in controlling prices (Anarfo et al ., 2019; Jungo et al ., 2021) and increasing the financial stability of banks (Jungo et al ., 2022a).…”

Section: Introductionmentioning

confidence: 99%

Institutions and economic growth: the role of financial inclusion, public spending on education and the military

Jungo

2024

REPS

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PurposeThe paper aims to investigate the relationship between institutions and economic growth in developing countries, considering the role of financial inclusion, education spending and military spending.Design/methodology/approachThe study employs dynamic panel analysis, specifically two-step system generalized method of moments (GMM), on a sample of 61 developing countries over the period 2009–2020.FindingsThe results confirm that weak institutional quality, weak financial inclusion and increased military spending are barriers to economic growth, conversely, increased spending on education and gross capital formation contribute to economic growth in developing countries. Regarding the specific institutional factor, we find that corruption, ineffective government, voice and accountability and weak rule of law contribute negatively to growth.Practical implicationsThe study calls for strengthening institutions so that the financial system supports economic growth and suggests increasing spending on education to improve access to and the quality of human capital, which is an important determinant of economic growth.Originality/valueThe study contributes to scarce literature by empirically analyzing the relationship between institutions and economic growth by considering the role of financial inclusion, public spending on education and military spending, factors that have been ignored in previous studies. In addition, the study identifies the institutional dimension that contributes to reduced economic growth in developing countries.

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Financial inclusion and income inequality nexus: A case of Africa

Cited by 23 publications

References 60 publications

The non-linear impact of financial development on income inequality: evidence from dynamic panel threshold model

The non-linear impact of financial development on income inequality: evidence from dynamic panel threshold model

A Revisit to Political Institutions and Inequality

Institutions and economic growth: the role of financial inclusion, public spending on education and the military

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