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Foreign Bank Presence, Financial Stability, and Income Inequality: Empirical Evidence from Some Selected Countries in Africa

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  • Khadijah Iddrisu

    (Simon Diedong Dombo University of Business and Integrated Development Studies)

Abstract

The issue of income inequality has been a canker in Africa. However, most African countries have a high influx of foreign bank presence (FBP) and are making efforts to stabilize their financial system. This study empirically examines whether FBP and financial stability independently alleviate income inequality across 33 African countries from 1995 to 2020, employing the two-step system generalized method of moment (2SGMM) technique. Furthermore, it explores how financial stability moderates the relationship between FBP and income inequality. Findings indicate that both FBP and financial stability contribute to reducing income inequality in Africa. Moreover, in the presence of financial stability, FBP has an additional diminishing effect on income inequality. The paper recommends that African countries should continue with regular stability checks to generate a robust financial system which can help FBP to further minimize income inequality.

Suggested Citation

  • Khadijah Iddrisu, 2025. "Foreign Bank Presence, Financial Stability, and Income Inequality: Empirical Evidence from Some Selected Countries in Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(4), pages 14032-14056, October.
    • Handle: RePEc:spr:jknowl:v:16:y:2025:i:4:d:10.1007_s13132-024-02412-y
    DOI: 10.1007/s13132-024-02412-y
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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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