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Income inequality, financial flows and political institution: sub-Saharan African financial network

  • John Nkwoma InekweEmail author
  • Yi Jin
  • Maria Rebecca Valenzuela
Article
  • 22 Downloads

Abstract

Using firm-level loan contracts, we generate aggregate measures of financial connections and examine how these indices relate to income inequality in sub-Saharan African (SSA) countries. The results reveal that more connectedness is not beneficial for these economies as shown by the degree and the eigenvector indices. Betweenness centrality worsens income inequality such that the act of intermediation in the provision of financing remains detrimental to net and market income inequalities. Independent access to funding has no significant effect on income inequality. While accounting for the influence of political instability, the results reveal that financial connectedness is beneficial in reducing income inequality.

Keywords

SSA economy Financial networks Institutions Income inequality 

JEL Classification

D31 F21 F36 

Notes

Compliance with ethical standards

Conflict of interest

There is no conflict of interest in this paper.

Human and animal rights

This article does not contain any studies with animals nor human beings performed by any of the authors.

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Applied Finance, Centre for Financial RiskMacquarie UniversitySydneyAustralia
  2. 2.Research Institute of Economics and ManagementSouthwestern University of Finance and EconomicsChengduChina
  3. 3.Queensland Productivity Commission, Centre for Efficiency and Productivity Analysis, University of QueenslandBrisbaneAustralia

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