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On the impact of financial development on income inequality in Africa: the importance of interest and economic growth rates gap

Jun 07, 2021 | MFW4A

This study contributes to the existing research efforts on the impact of financial development on income inequality by considering the significance of the spread between interest and growth rates of countries in Africa. In particular, it investigates whether the impact of financial development on income inequality is conditioned on the relative speed of growth in interest and growth rates of countries. This research concentrates on Africa because of the continent’s high income inequality, nascent financial sectors, relatively higher interest rates and sluggish growth. The main aim of the study is to examine whether the interplay of the interest and growth rates mediate the how financial development influences income inequality in the continent.