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Financial Development and Income Inequality: Evidence from African Countries

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  • Enowbi Batuo, Michael
  • Guidi, Francesco
  • Mlambo, Kupukile

Abstract

This paper present empirical evidence on how financial development is related to income distribution in a panel data set covering 22 African countries for the period between 1990 to 2004. A dynamic panel estimation technique (GMM) is employ and the findings indicate that income inequality decrease as economies develop their financial sector, which is consistent with the bulk of theoretical and empirical research. The result also confirm that educational attainment play a significant role in making income distribution more equal. We also find no evidence supporting the Greenwood-Jovanovic hypothesis of an inverted-U- shaped relationship between financial sector development and inequality.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:25658
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Financial development; income inequality; Africa G20; D63; 055;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • G2 - Financial Economics - - Financial Institutions and Services

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