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Financial Openness and Income Inequality: Do Institutions matter for Africa?

Author

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  • Samouel Beji

    (MoFID-University of Sousse (Tunisia))

Abstract

There has been little empirical literature on the relationship between financial openness and income inequality in Africa. Using a panel threshold estimation technique we examine whether the effect of financial openness on income inequality is dependent to the institutional quality. We adopt the methodology proposed by Hansen (1999) on a panel dataset of 21 African countries over the period 1985-2014. Our results confirm the existence of a two-regime split. In fact, financial openness seems to significantly widen the income inequality in countries with low level of institutional quality while it does not have a significant effect in countries with relatively high institutional quality. These results concur with a well-established literature and demonstrate that financial openness-income inequality link is contingent on the quality of the political and institutional environment in the African countries.

Suggested Citation

  • Samouel Beji, 2019. "Financial Openness and Income Inequality: Do Institutions matter for Africa?," Economics Bulletin, AccessEcon, vol. 39(1), pages 104-114.
    • Handle: RePEc:ebl:ecbull:eb-18-01020
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    More about this item

    Keywords

    Financial Openness; Income Inequality; Threshold Panel Regression;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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