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Financial inclusion and inequality: A cross-country analysis

Author

Listed:
  • Armand Fouejieu
  • Ratna Sahay
  • Martin Cihak
  • Shiyuan Chen

Abstract

In the context of increasing economic inequality, linkages between finance and the distribution of wealth and income have attracted considerable attention. This paper examines the relationships between access to and use of financial services – financial inclusion – and economic inequality. Building on new dataset on availability and use of financial services, the analysis provides empirical estimates of the impact of financial inclusion on inequality, and explores potential nonlinearities in this relationship by highlighting the role of the prevailing macroeconomic and financial conditions. The paper also sheds light on financial inclusion gender gaps and investigates how disproportionate exclusion of women from usage of financial services affects income inequality. Finally, the study provides proxies for measuring extreme inequality, and examines the linkages between those variables and financial inclusion.

Suggested Citation

  • Armand Fouejieu & Ratna Sahay & Martin Cihak & Shiyuan Chen, 2020. "Financial inclusion and inequality: A cross-country analysis," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 29(8), pages 1018-1048, November.
    • Handle: RePEc:taf:jitecd:v:29:y:2020:i:8:p:1018-1048
    DOI: 10.1080/09638199.2020.1785532
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