Income inequality persistence in African countries: financial regulation and military expenditure roles

Purpose - Evidence shows that African countries are confronted with high levels of income inequality. Therefore, it is relevant to approach and analyze the factors contributing to these severe inequality cases. This paper addresses the issue by focusing on the role of financial regulation and military spending. Design/methodology/approach - We used a sample of 30 African countries and a recent period (2009–2020), employing various instrumental variable estimation techniques to control for endogeneity. Findings - The results confirm that economic growth aggravates income inequality due to high corruption and political instability. Results confirm that the increase in military spending increases inequality and that financial regulation weakens financial inclusion and also increases income inequality. Research limitations/implications - The study shows the need for greater control of corruption and the promotion of political stability so that economic growth and financial inclusion can effectively reduce income inequality, as well as the need for a better balance in the drafting of financial regulations and the preparation of military expenditure to safeguard other policy objectives. Originality/value - The present study contributes to scarce financial, economic, and social literature considering the role of financial regulation and military spending in the persistence of income inequality in African countries. Previous studies disregarded this fact. Peer review - The peer review history for this article is available at:https://publons.com/publon/10.1108/IJSE-04-2023-0287