IDEAS home Printed from https://ideas.repec.org/a/taf/irapec/v30y2016i6p790-808.html
   My bibliography  Save this article

Financial development, control of corruption and income inequality

Author

Listed:
  • Samuel Adams
  • Edem Kwame Mensah Klobodu

Abstract

This paper examines the effect of financial development and control of corruption on income inequality in 21 Sub-Saharan African (SSA) countries over the period 1985–2011 using the pooled mean group (PMG) estimator. The empirical results show that financial development measures have positive impact on income inequality, which suggest that financial development increases income inequality. On the other hand, the coefficients of control of corruption are negative and significantly related to income inequality which implies that corruption control reduces income inequality. Further, the interaction of the financial development and the control of corruption is found to be negatively and significantly related to income inequality. Equally the interaction of the financial development and transparency index (an alternate measure of corruptibility) is found to be negatively and significantly related to income inequality. These findings suggest that the control of corruption and transparency in governance are crucial in reducing income inequality in SSA.

Suggested Citation

  • Samuel Adams & Edem Kwame Mensah Klobodu, 2016. "Financial development, control of corruption and income inequality," International Review of Applied Economics, Taylor & Francis Journals, vol. 30(6), pages 790-808, November.
    • Handle: RePEc:taf:irapec:v:30:y:2016:i:6:p:790-808
    DOI: 10.1080/02692171.2016.1208740
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/02692171.2016.1208740
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/02692171.2016.1208740?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Baliamoune-Lutz, Mina & Lutz, Stefan H., 2004. "Rural-urban inequality in Africa: A panel study of the effects of trade liberalization and financial deepening," ZEI Working Papers B 06-2004, University of Bonn, ZEI - Center for European Integration Studies.
    2. Pesaran, M. H. & Shin, Y. & Smith, R. P., 1997. "Pooled Estimation of Long-run Relationships in Dynamic Heterogeneous Panels," Cambridge Working Papers in Economics 9721, Faculty of Economics, University of Cambridge.
    3. 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.
    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. Bilal Mehmood & Syed Hassan Raza & Mahwish Rana & Huma Sohaib & Muhammad Azhar Khan, 2014. "Triangular Relationship between Energy Consumption, Price Index and National Income in Asian Countries: A Pooled Mean Group Approach in Presence of Structural Breaks," International Journal of Energy Economics and Policy, Econjournals, vol. 4(4), pages 610-620.
    2. Boukraine, Wissem, 2020. "The finance-inequality nexus in the BRICS countries: evidence from an ARDL bound testing approach," MPRA Paper 101976, University Library of Munich, Germany.
    3. Tchamyou, Vanessa S. & Erreygers, Guido & Cassimon, Danny, 2019. "Inequality, ICT and financial access in Africa," Technological Forecasting and Social Change, Elsevier, vol. 139(C), pages 169-184.
    4. Chi, Mingyuan & Ping, Wang, 2024. "Resources abundant economies and sustainability of economic growth: A novel panel evidence of high resources economies," Resources Policy, Elsevier, vol. 88(C).
    5. Wang, Wei & Yang, Haoxi & Wang, Xi, 2023. "Financial development and wage income: Evidence from the global football market," Journal of Banking & Finance, Elsevier, vol. 149(C).
    6. Samargandi, Nahla & Fidrmuc, Jan & Ghosh, Sugata, 2015. "Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries," World Development, Elsevier, vol. 68(C), pages 66-81.
    7. Simplice A. Asongu & Jacinta C. Nwachukwu, 2017. "Recent finance advances in information technology for inclusive development: a survey," Research Africa Network Working Papers 17/009, Research Africa Network (RAN).
    8. Simplice Asongu & Rexon Nting, 2021. "The role of finance in inclusive human development in Africa revisited," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 38(2), pages 345-370, February.
    9. Siddique, Abu & Selvanathan, E.A. & Selvanathan, Saroja, 2016. "The impact of external debt on growth: Evidence from highly indebted poor countries," Journal of Policy Modeling, Elsevier, vol. 38(5), pages 874-894.
    10. Jacques Mairesse & Bronwyn H. Hall & Benoît Mulkay, 1999. "Firm-Level Investment in France and the United States: An Exploration of What We Have Learned in Twenty Years," Annals of Economics and Statistics, GENES, issue 55-56, pages 27-67.
    11. Marta de la Cuesta-González & Cristina Ruza & José M. Rodríguez-Fernández, 2020. "Rethinking the Income Inequality and Financial Development Nexus. A Study of Nine OECD Countries," Sustainability, MDPI, vol. 12(13), pages 1-18, July.
    12. Asongu, Simplice & Nwachukwu, Jacinta C., 2015. "Finance and Inclusive Human Development: Evidence from Africa," MPRA Paper 71787, University Library of Munich, Germany.
    13. Fanglin LI & Michael APPIAH & Regina Naa Amua DODOO, 2020. "The Effects Of Technology And Labor On Growth In Emerging Countries," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 12(2), pages 39-47, June.
    14. Simplice Asongu & Uchenna Efobi & Ibukun Beecroft, 2015. "Inclusive Human Development in Pre-crisis Times of Globalization-driven Debts," African Development Review, African Development Bank, vol. 27(4), pages 428-442, December.
    15. Ridwan, Ibrahim Lanre & Senathirajah, Abdul Rahman Bin S. & Al-Faryan, Mamdouh Abdulaziz Saleh, 2024. "Investigating the asymmetric effects of financial development on trade performance in Africa: Can digitalization, transport services, and regulatory quality drive the vision 2063?," The Journal of Economic Asymmetries, Elsevier, vol. 30(C).
    16. Marc Audi & Amjad Ali, 2023. "Public Policy and Economic Misery Nexus: A Comparative Analysis of Developed and Developing World," International Journal of Economics and Financial Issues, Econjournals, vol. 13(3), pages 56-73, May.
    17. Kazeem B. Ajide & Olorunfemi Y. Alimi & Simplice A. Asongu, 2019. "Ethnic Diversity and Inequality in Sub-Saharan Africa: Do Institutions Reduce the Noise?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(3), pages 1033-1062, October.
    18. Rémi Bazillier & Jérôme Hericourt, 2017. "The Circular Relationship Between Inequality, Leverage, And Financial Crises," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 463-496, April.
    19. Simplice A. Asongu, 2013. "Investment And Inequality In Africa: Which Financial Channels Are Good For The Poor?," The African Finance Journal, Africagrowth Institute, vol. 15(2), pages 43-65.
    20. Elena Podrecca & Gianpaolo Rossini, 2015. "International Factor Mobility, Wages and Prices," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 683-694, August.

    More about this item

    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:taf:irapec:v:30:y:2016:i:6:p:790-808. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CIRA20 .

    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.