Income inequality, financial flows and political institution: sub-Saharan African financial network
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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.
KeywordsSSA economy Financial networks Institutions Income inequality
JEL ClassificationD31 F21 F36
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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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