IDEAS home Printed from https://ideas.repec.org/a/ers/ijebaa/vxiiiy2025i3p3-23.html
   My bibliography  Save this article

Income Inequality and Financialization: Evidence for MENA Countries

Author

Listed:
  • Amira Hakim

Abstract

Purpose: Using country panel data, we analyze the impact of financialization through the interconnectedness between the financial system and the real sector on income inequality in MENA countries from 2000 to 2015. Design/methodology/approach: Focusing on the real sector we use Islamic finance indicator as a proxy for financialization, we find a positive link between income inequality and financialization. Findings: We demonstrate empirically that financialization can be used as tool to target policy over social economic problem such as income inequality. Our measure of financialization indicates that Islamic finance is a tool to reduce the inequality in the economy such as income inequality. Practical implications: Our results suggest that a rise in private debt, trade openness, and economic development contribute to the decrease of inequality, while foreign direct investment, the unemployment rate, the age dependency ratio, and the fixed investment are associated with an increase in inequality. Originality/value: The empirical results show that the impact of financialization in the long term is more important that in the Short term.

Suggested Citation

  • Amira Hakim, 2025. "Income Inequality and Financialization: Evidence for MENA Countries," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 3-23.
    • Handle: RePEc:ers:ijebaa:v:xiii:y:2025:i:3:p:3-23
    as

    Download full text from publisher

    File URL: https://ijeba.com/journal/893/download
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vladimir Hlasny & Paolo Verme, 2018. "Top Incomes and the Measurement of Inequality in Egypt," The World Bank Economic Review, World Bank, vol. 32(2), pages 428-455.
    2. Eleftherios Thalassinos & Erginbay Ugurlu & Yusuf Muratoglu, 2012. "Income Inequality and Inflation in the EU," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 127-140.
    3. Dünhaupt, Petra, 2013. "The effect of financialization on labor's share of income," IPE Working Papers 17/2013, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    4. Olivier Giovannoni, 2014. "What Do We Know About the Labor Share and the Profit Share? Part III: Measures and Structural Factors," Economics Working Paper Archive wp_805, Levy Economics Institute.
    5. Demir, FIrat, 2009. "Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets," Journal of Development Economics, Elsevier, vol. 88(2), pages 314-324, March.
    6. Suresh Naidu & Yaw Nyarko & Shing-Yi Wang, 2016. "Monopsony Power in Migrant Labor Markets: Evidence from the United Arab Emirates," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1735-1792.
    7. Olivier Giovannoni, 2014. "What Do We Know About the Labor Share and the Profit Share? Part II: Empirical Studies," Economics Working Paper Archive wp_804, Levy Economics Institute.
    8. Costas Lapavitsas, 2009. "Financialisation embroils developing countries," Papeles de Europa, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Estudios Internacionales (ICEI), vol. 19, pages 108-139.
    9. Eckhard Hein & Christian Schoder, 2011. "Interest rates, distribution and capital accumulation -- A post-Kaleckian perspective on the US and Germany," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(6), pages 693-723, November.
    10. Dünhaupt, Petra, 2014. "An empirical assessment of the contribution of financialization and corporate governance to the rise in income inequality," IPE Working Papers 41/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    11. Facundo Alvaredo & Thomas Piketty, 2014. "Measuring Top Incomes and lnequality in the Middle East: Data Limitations and Illustration with the Case of Egypt," Working Papers 832, Economic Research Forum, revised May 2014.
    12. Eckhard Hein & Daniel Detzer, 2015. "Finance-Dominated Capitalism and Income Distribution: A Kaleckian Perspective on the Case of Germany," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(2), pages 171-191, July.
    13. Mona Said, 2007. "The Fall and Rise of Earnings and Inequality in Egypt: New Evidence From the ELMPS, 2006," Working Papers 708, Economic Research Forum, revised 01 Jan 2007.
    14. Roine, Jesper & Vlachos, Jonas & Waldenström, Daniel, 2009. "The long-run determinants of inequality: What can we learn from top income data?," Journal of Public Economics, Elsevier, vol. 93(7-8), pages 974-988, August.
    15. Eckhard Hein, 2015. "Finance-dominated capitalism and re-distribution of income: a Kaleckian perspective," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 39(3), pages 907-934.
    16. Eleftherios Thalassinos & Nejib Hachicha & Amira Hakim, 2022. "The International Spillover Among Sectors and the Interconnectedness to the Global Inflation Cycle," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 12(1), pages 3-11.
    17. Ewa Karwowski & Engelbert Stockhammer, 2017. "Financialisation in emerging economies: a systematic overview and comparison with Anglo-Saxon economies," Economic and Political Studies, Taylor & Francis Journals, vol. 5(1), pages 60-86, January.
    18. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    19. Jorge Garcia-Arias, 2015. "International Financialization and the Systemic Approach to International Financing for Development," Global Policy, London School of Economics and Political Science, vol. 6(1), pages 24-33, February.
    20. José A. Alemán, 2011. "Cooperative Institutions and Inequality in the OECD: Bringing the Firm Back In," Social Science Quarterly, Southwestern Social Science Association, vol. 92(3), pages 830-849, September.
    21. Hamid Raza & Bjorn Gudmundsson & Stephen Kinsella & Gylfi Zoega, 2015. "Experiencing financialisation in small open economies: An empirical investigation of Ireland and Iceland," Working papers wpaper84, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Facundo Alvaredo & Lydia Assouad & Thomas Piketty, 2019. "Measuring lnequality in the Middle East 1990–2016: The World’s Most Unequal Region?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(4), pages 685-711, December.
    2. Daniele Tori & Özlem Onaran, 2022. "Financialisation and firm-level investment in developing and emerging economies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 46(4), pages 891-919.
    3. Tori, Daniele & Onaran, Özlem, 2017. "The effects of financialisation and financial development on investment: evidence from firm-level data in Europe," Greenwich Papers in Political Economy 16089, University of Greenwich, Greenwich Political Economy Research Centre.
    4. Daniele Tori & Özlem Onaran, 2017. "Financialisation and physical investment: a global race to the bottom in accumulation?," Working Papers PKWP1707, Post Keynesian Economics Society (PKES).
    5. Detzer, Daniel, 2019. "Financialization made in Germany: A review," IPE Working Papers 122/2019, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    6. Roberto Veneziani & Luca Zamparelli & Leila E. Davis, 2017. "Financialization And Investment: A Survey Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1332-1358, December.
    7. Margarita Carvalho & João Cerejeira, 2019. "Financialization, Corporate Governance and Employee Pay: A Firm Level Analysis," NIPE Working Papers 08/2019, NIPE - Universidade do Minho.
    8. Eckhard Hein & Daniel Detzer, 2015. "Finance-Dominated Capitalism and Income Distribution: A Kaleckian Perspective on the Case of Germany," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(2), pages 171-191, July.
    9. Hötte, Kerstin, 2023. "Demand-pull, technology-push, and the direction of technological change," Research Policy, Elsevier, vol. 52(5).
    10. Karsten Kohler & Alexander Guschanski & Engelbert Stockhammer, 2019. "The impact of financialisation on the wage share: a theoretical clarification and empirical test," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(4), pages 937-974.
    11. Daniele Tori & Özlem Onaran, 2018. "The effects of financialization on investment: evidence from firm-level data for the UK," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(5), pages 1393-1416.
    12. Onur Özdemir, 2020. "The handicap for enhanced solidarity across advanced economies: The greater the economic openness higher the unequal distribution of income," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(4), pages 585-632, December.
    13. Bellocchi, Alessandro & Marin, Giovanni & Travaglini, Giuseppe, 2023. "The labor share puzzle: Empirical evidence for European countries," Economic Modelling, Elsevier, vol. 124(C).
    14. Riccardo Pariboni & Walter Paternesi Meloni & Pasquale Tridico, 2020. "When Melius Abundare Is No Longer True: Excessive Financialization and Inequality as Drivers of Stagnation," Review of Political Economy, Taylor & Francis Journals, vol. 32(2), pages 216-242, April.
    15. Karsten Köhler & Alexander Guschanski & Engelbert Stockhammer, 2015. "How does financialisation affect functional income distribution? A theoretical clarification and empirical assessment," Economics Discussion Papers 2015-5, School of Economics, Kingston University London.
    16. Ricardo Barradas, 2019. "Financialization and Neoliberalism and the Fall in the Labor Share: A Panel Data Econometric Analysis for the European Union Countries," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(3), pages 383-417, September.
    17. repec:ilo:ilowps:484122 is not listed on IDEAS
    18. McCloskey Deirdre Nansen, 2018. "The Two Movements in Economic Thought, 1700–2000: Empty Economic Boxes Revisited," Man and the Economy, De Gruyter, vol. 5(2), pages 1-20, December.
    19. Wahidin, Deni & Akimov, Alexandr & Roca, Eduardo, 2021. "The impact of bond market development on economic growth before and after the global financial crisis: Evidence from developed and developing countries," International Review of Financial Analysis, Elsevier, vol. 77(C).
    20. Alessandro Federici & Pierluigi Montalbano, 2012. "Macroeconomic volatility, consumption behaviour and welfare: A cross-country analysis," Working Paper Series 3612, Department of Economics, University of Sussex Business School.
    21. Eckhard Hein, 2015. "Causes and Consequences of the Financial Crisis and the Implications for a More Resilient Financial and Economic System: Synthesis of FESSUD Work Package 3," Working papers wpaper128, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ers:ijebaa:v:xiii:y:2025:i:3:p:3-23. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marios Agiomavritis (email available below). General contact details of provider: https://ijeba.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.