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Does financial liberalization reduce income inequality? Evidence from Africa

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  • Koudalo, Yawovi M.A.
  • Wu, Ji

Abstract

This paper investigates the impact of financial liberalization on income inequality by using the country-level panel data from 51 African countries in more than two decades. We find that income inequality increases, rather than decreases, with the level of financial liberalization. This finding is consistent with the hypothesis that financial liberalization likely induces banks to allocate the scarce financial resources in African countries more discriminatively to rich clienteles but excludes the poor ones from financial access, which thus widens the income gap.

Suggested Citation

  • Koudalo, Yawovi M.A. & Wu, Ji, 2022. "Does financial liberalization reduce income inequality? Evidence from Africa," Emerging Markets Review, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:ememar:v:53:y:2022:i:c:s1566014122000620
    DOI: 10.1016/j.ememar.2022.100945
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    Cited by:

    1. Kwamivi Mawuli Gomado, 2024. "Distributional Effects of Structural Reforms in Developing Countries: Evidence from Financial Liberalization," Open Economies Review, Springer, vol. 35(5), pages 1051-1084, November.
    2. Abdullah Almounsor & Sami Mensi, 2024. "The Relationship Between Financial Development, Institutions Quality, and Income Inequality from the Sub-Saharan Africa Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 14307-14338, September.

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    More about this item

    Keywords

    Financial liberalization; Income inequality; Africa;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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