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Income inequality, financial flows and political institution: sub-Saharan African financial network

Author

Listed:
  • John Nkwoma Inekwe

    (Macquarie University)

  • Yi Jin

    (Southwestern University of Finance and Economics)

  • Maria Rebecca Valenzuela

    (Queensland Productivity Commission, Centre for Efficiency and Productivity Analysis, University of Queensland)

Abstract

Using firm-level loan contracts, we generate aggregate measures of financial connections and examine how these indices relate to income inequality in sub-Saharan African (SSA) countries. The results reveal that more connectedness is not beneficial for these economies as shown by the degree and the eigenvector indices. Betweenness centrality worsens income inequality such that the act of intermediation in the provision of financing remains detrimental to net and market income inequalities. Independent access to funding has no significant effect on income inequality. While accounting for the influence of political instability, the results reveal that financial connectedness is beneficial in reducing income inequality.

Suggested Citation

  • John Nkwoma Inekwe & Yi Jin & Maria Rebecca Valenzuela, 2020. "Income inequality, financial flows and political institution: sub-Saharan African financial network," Empirical Economics, Springer, vol. 58(6), pages 2635-2665, June.
    • Handle: RePEc:spr:empeco:v:58:y:2020:i:6:d:10.1007_s00181-019-01634-3
    DOI: 10.1007/s00181-019-01634-3
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    More about this item

    Keywords

    SSA economy; Financial networks; Institutions; Income inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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