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Remittances, Financial Inclusion and Income Inequality in Africa

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  • BKWAYEP, NGUEMNANG Yannick Rodrigue
  • TSAFACK, NANFOSSO Roger

Abstract

This paper extends the existing literature on financial inclusion by analyzing the role of financial inclusion (FI) within remittances on income inequality (Gini, Atkinson and Palma-Ratio). It examines whether FI amplifies the reduction in income inequality in a panel of 47 countries over the period 2004-2014. The empirical evidence is based on Generalised Method Moments. We used Five financial inclusion indicators (ATMs for 100,000 adults; banking branches for 100,000 adults; credits: deposits and insurance), remittances and three income inequality variables (Gini index; Atkinson and Palma ratio) as part of this study. The results show that migrant remittances and FI reduce income inequality. The results further indicate that FI implifies the impact of the migrant remittances on income inequality, revealing a complementarity between remittances and FI to reduce income inequality. The complementary action of financial inclusion on migrants' remittances offers wider access to financial services which also leads to an increase in remittances and therefore reduces inequalities.

Suggested Citation

  • BKWAYEP, NGUEMNANG Yannick Rodrigue & TSAFACK, NANFOSSO Roger, 2020. "Remittances, Financial Inclusion and Income Inequality in Africa," MPRA Paper 99684, University Library of Munich, Germany, revised 22 Apr 2020.
    • Handle: RePEc:pra:mprapa:99684
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    References listed on IDEAS

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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