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How do financial reforms affect inequality through financial sector competition? Evidence from Africa

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  • Asongu Simplice

    ()
    (Yaoundé/Cameroun)

Abstract

In the first empirical study on how financial reforms have been instrumental in mitigating inequality through financial sector competition, we contribute at the same time to the macroeconomic literature on measuring financial development and respond to the growing field of economic development by means of informal sector promotion. Hitherto, unexplored financial sector concepts of formalization, semi-formalization and informalization are introduced. Four main findings are established: (1) while formal financial development decreases inequality, financial sector formalization increases it; (2) whereas semi-formal financial development increases inequality, the effect of financial semi-formalization is unclear; (3) both informal financial development and financial informalization have an income equalizing effect and; (4) non-formal financial development is pro-poor. Policy implications are discussed.

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File URL: http://www.afridev.org/RePEc/agd/agd-wpaper/How-do-financial-reforms-affect-inequality-through-financial-sector-competition.pdf
File Function: Revised version, 2013
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Bibliographic Info

Paper provided by African Governance and Development Institute. in its series Working Papers with number 13/011.

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Length: 19
Date of creation: 01 Jan 2013
Date of revision:
Handle: RePEc:agd:wpaper:13/011

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Keywords: Financial Development; Shadow Economy; Poverty; Inequality; Africa;

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References

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  1. Oded Galor & Joseph Zeira, 2013. "Income Distribution and Macroeconomics," Working Papers 2013-12, Brown University, Department of Economics.
  2. Asongu Simplice, 2012. "Financial sector competition and knowledge economy: evidence from SSA and MENA countries," Working Papers 12/021, African Governance and Development Institute..
  3. Hisako Kai & Shigeyuki Hamori, 2009. "Globalization, financial depth, and inequality in Sub-Saharan Africa," Economics Bulletin, AccessEcon, vol. 29(3), pages 2025-2037.
  4. Beck, T.H.L. & Demirgüç-Kunt, A. & Levine, R., 2007. "Finance, inequality and the poor," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125426, Tilburg University.
  5. Magnus Saxegaard, 2006. "Excess Liquidity and the Effectiveness of Monetary Policy," IMF Working Papers 06/115, International Monetary Fund.
  6. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Simplice A, Asongu, 2012. "How has Mobile Phone Penetration Stimulated Financial Development in Africa?," MPRA Paper 41198, University Library of Munich, Germany.
  8. Simplice A., Asongu, 2011. "Investment and inequality in Africa: which financial channels are good for the poor?," MPRA Paper 34990, University Library of Munich, Germany.
  9. Enowbi Batuo, Michael & Guidi, Francesco & Mlambo, Kupukile, 2010. "Financial Development and Income Inequality: Evidence from African Countries," MPRA Paper 25658, University Library of Munich, Germany.
  10. Asongu Simplice, 2012. "How has Mobile Banking Stimulated Financial Development in Africa?," Working Papers 12/027, African Governance and Development Institute..
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Cited by:
  1. Simplice A. Asongu & Gilbert A.A. Aminkeng, 2013. "The economic consequences of China--Africa relations: debunking myths in the debate," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 11(4), pages 261-277, November.
  2. Asongu Simplice, 2013. "New financial development indicators: with a critical contribution to inequality empirics," Working Papers 13/036, African Governance and Development Institute..
  3. Asongu Simplice, 2013. "Liberalization and financial sector competition: a critical contribution to the empirics with an African assessment," Working Papers 13/031, African Governance and Development Institute..
  4. Asongu Simplice, 2013. "The impact of mobile phone penetration on African inequality," Working Papers 13/021, African Governance and Development Institute..
  5. Simplice A, Asongu, 2011. "Finance and growth: Schumpeter might be wrong in our era. New evidence from Meta-analysis," MPRA Paper 32559, University Library of Munich, Germany, revised 07 Feb 2013.
  6. Asongu, Simplice, 2013. "Mobile banking and mobile phone penetration: which is more pro-poor in Africa?," MPRA Paper 56800, University Library of Munich, Germany.
  7. Asongu Simplice, 2014. "On the substitution of institutions and finance in investment," Working Papers 14/005, African Governance and Development Institute..
  8. Asongu, Simplice, 2014. "Fresh Patterns of Liberalization, Bank Return and Return Uncertainty in Africa," MPRA Paper 56813, University Library of Munich, Germany.
  9. Asongu Simplice, 2013. "Finance and growth: New evidence from Meta-analysis," Working Papers 13/029, African Governance and Development Institute..

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