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Fintech, financial inclusion and income inequality nexus in Africa

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  • Tough Chinoda
  • Tafirei Mashamba
  • Andrew Vivian

Abstract

Financial institutions play a pivotal role in the efficient allocation of capital resources. However, some households and firms may be excluded from formal financial markets due to asymmetric information and market imperfections, thereby adversely affecting equitable income distribution. On the other hand, among other things, access to finance is viewed as one of the key tools to fight poverty. This study develops a novel double FFI Model and applies the structural equation modelling to simultaneously analyze the interaction between financial technology, financial inclusion, and income inequality in a panel of 25 African countries over the periods 2011, 2014, and 2017. The results show that financial inclusion mediates the financial technology-income inequality relationship thus playing a fundamental role in reducing income inequality in Africa. On the policy front, the study urges African policymakers and regulators to craft policies that enhance Fintech developments and financial inclusion.

Suggested Citation

  • Tough Chinoda & Tafirei Mashamba & Andrew Vivian, 2021. "Fintech, financial inclusion and income inequality nexus in Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1986926-198, January.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1986926
    DOI: 10.1080/23322039.2021.1986926
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    Cited by:

    1. Okowa, Ezaal, Vincent & Moses Owede, 2022. "‘Financial Inclusion-Income Inequality’ Nexus in Nigeria: Evidence from Dynamic Ordinary Least Square (DOLS) Modeling Approach," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 9(2), pages 84-94, February.
    2. Ozili, Peterson K, 2023. "Determinants of Fintech and Bigtech lending: the role of financial inclusion and financial development," MPRA Paper 117465, University Library of Munich, Germany.
    3. Comlanvi Martin Konou, 2023. "Entrepreneurial Risk and Digital Financial Inclusion: A Cross‐Country Analysis," Economic Papers, The Economic Society of Australia, vol. 42(3), pages 267-281, September.

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