Does financial inclusion induce poverty, income inequality, and financial stability: empirical evidence from the 54 African countries?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Iftikhar Khan ◽  
Ismail Khan ◽  
Aziz Ullah Sayal ◽  
Muhammad Zubair Khan
Keyword(s):  
Panel Data ◽  
Income Inequality ◽  
Financial Stability ◽  
Mean Value ◽  
Financial Inclusion ◽  
African Countries ◽  
Content Type ◽  
Inclusive System ◽  
The Impact ◽  
Unbalanced Panel Data

PurposeThe aim of the study is to examine the impact of financial inclusion on poverty, income inequality and financial stability using panel data of 54 African countries.Design/methodology/approachTo achieve this objective, the current study used multiple regressions across an unbalanced panel data of 54 African countries which are based on the four years mean value for the period 2001–2019.FindingsThe results show that financial inclusion (FI) is a valuable indicator; it reduces poverty, income inequality and improves financial stability.Research limitations/implicationsThe study invokes the attention of government and policymakers to build up a financially inclusive system which, in turn, leads to improve financial stability and lower poverty and income inequality. They should focus on quality and sustainable financial products and services in terms of financial inclusion to avoid dominant accounts and ensure consumer protection.Originality/valueThis adds to the scarce literature on the impact of financial inclusion on poverty, income inequality and financial stability in the context of African countries. The study contributes to the literature on the issue of financial inclusion and poverty, income inequality and financial stability by reconfirming (or otherwise) findings of previous studies.

Can financial inclusion reduce the presence of corruption? Evidence from selected countries in Africa

2020 ◽  
Vol 47 (11) ◽  
pp. 1345-1362
Author(s):  
Folorunsho M. Ajide
Keyword(s):  
Random Effect ◽  
Secondary Data ◽  
Threshold Level ◽  
Financial Inclusion ◽  
Least Square ◽  
African Countries ◽  
Content Type ◽  
The Impact ◽  
Control Of Corruption

PurposeThe purpose of this paper is to evaluate the impact of financial inclusion (FI) on control of corruption in selected African countries.Design/methodology/approachThe study employs secondary data spanning over a period of 2005–2016. These data are sourced from IMF's International Financial Statistics, World Bank Development Indicators, Global Financial Development Database, Transparency International and International Country Risk Guide. The author uses Sarma (2008) approach to construct the FI index for 13 countries in Africa. The author applies random effect, robust least square and instrumental variable (IV) estimations to examine the impact of FI on control of corruption in Africa.FindingsThe author finds that financial inclusion improves the control of corruption. The author tests for possible FI threshold to avoid the case of extreme FI in Africa. The results show that there is a threshold level if reached, FI would have negative impacts in the control of corruption. This may likely happen mainly due to weak institutions in Africa. The results are robust to alternative proxy for control of corruption and various alternative estimation techniques.Practical implicationsThe finding indicates that FI can serve as part of toolkits for reducing corruption in Africa.Originality/valueThis study stresses the important role of FI in the economic system. It is the first paper that empirically suggests the role of FI in controlling corruption in Africa.

Financial inclusion in Africa: does it promote entrepreneurship?

2020 ◽  
Vol 12 (4) ◽  
pp. 687-706 ◽  
Author(s):  
Folorunsho M. Ajide
Keyword(s):  
World Bank ◽  
Random Effect ◽  
Financial Inclusion ◽  
Least Square ◽  
African Region ◽  
African Countries ◽  
Ongoing Debate ◽  
Content Type ◽  
Development Indicators ◽  
The Impact

Purpose Financial inclusion policy focuses on bringing the less privileged groups into the formal financial system. Financial inclusion has a lot of benefits in the society. It can reduce the level of poverty, inequality and encourage business startup. This study aims to examine the impact of financial inclusion on entrepreneurship in selected African countries. Design/methodology/approach This paper examines how financial inclusion impacts entrepreneurship in 13 selected African countries using data from World Bank Development Indicators, IMF’s International Financial Statistics, doing business and World Bank Entrepreneurship Survey for the period of 2005-2016. It uses panel data regression techniques such as random effect, IV estimation and robust least square. Findings The results show that financial inclusion has a significant and positive effect on entrepreneurship in Africa. This result is robust to both alternative measures of financial inclusion and alternative estimators. Originality/value The possible relationship between financial inclusion and entrepreneurial development has been an ongoing debate in other developing countries. However, this issue has been neglected in the African region. There are little or no evidence to support the possible relationship in Africa. This paper makes an important contribution in this respect and further provides insightful information in the ongoing debate.

Nexus of financial inclusion, competition, concentration and financial stability

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mallika Saha ◽  
Kumar Debasis Dutta
Keyword(s):  
Low Income ◽  
Financial Stability ◽  
Generalized Method Of Moments ◽  
Financial Inclusion ◽  
Least Square ◽  
Middle Income ◽  
Content Type ◽  
Study Support ◽  
Econometric Tests ◽  
The Impact

Purpose Since the strike of the 2007-2008 global financial crises, financial stability has been discussed with immense interest in academic and policy circles. Following this essence, this paper aims to investigate the nexus of financial inclusion, competition concentration and financial stability. Design/methodology/approach To analyze this relationship, this study uses different inclusion indices constructed by principle component analysis, Boon indicator, different concentration measures and Z-score, for a sample of 92 countries and subsamples based on income and economic grouping of those countries as well as for pre- and post-crisis episodes over the period of 2004-2014. This study also investigates the variation in inclusion–stability relationships in the presence of competition and concentration. This study uses two-step system-generalized method of moments (GMM) and two-stage least square to address the endogeneity. Findings The study finds that competition contributes to stability; however, there is evidence of fragility in the presence of concentration in the banking industry. Moreover, this study finds a U-shaped inclusion–stability relationship. The overall results of this study support the competition–stability view and a trade-off between inclusion and stability, which are consistent and robust to alternative econometric tests. Research limitations/implications Financial inclusion should be endorsed with caution in low-income, middle-income and emerging countries, and prudent policies should be taken to govern the market concentration to maintain financial stability. Originality/value To the best of the authors’ knowledge, this paper is the first to explain the impact of financial inclusion on financial stability in the presence of market heterogeneity.

scholarly journals The labor share and income inequality: some empirical evidence for the period 1990-2015

2020 ◽  
Vol 28 (84) ◽  
pp. 173-195
Author(s):  
Iñaki Erauskin
Keyword(s):  
Labor Market ◽  
Panel Data ◽  
Income Inequality ◽  
Gini Coefficient ◽  
Content Type ◽  
Labor Share ◽  
Income Share ◽  
The Gini Coefficient ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to analyze empirically the relationship between the labor share and income inequality, as measured by the Gini coefficient and by the income shares for different quintiles, during the period 1990–2015 for 62 developed and developing countries. Design/methodology/approach This study uses panel data techniques to analyze empirically the relationship between the labor share and income inequality. Findings This paper finds that a lower labor share is associated with a higher Gini coefficient. A lower labor share is found to be strongly associated with a smaller income share for the lowest two quintiles and larger income share for the highest quintile and weakly associated with a smaller income share for the third and fourth quintiles. Moreover, this paper finds that the lower the quintile, the stronger the impact of the labor share on the income share of the quintile. Social implications Policymakers should take into account the evolution of the labor share. Public policies that improve labor market outcomes, such as those aimed to promote participation in the labor market and strengthen the human capital of low-income groups, seem necessary to prevent the rise in economic inequalities. Moreover, as the digital transformation of society progresses, policies to promote skill deepening may have an important role in reversing excessive inequalities. Originality/value How changes in the labor share are associated with changes in the Gini coefficient, and how this is driven by income shares for different quintiles, for a broad range of countries during the most recent period, has not been comprehensively studied using panel data techniques.

Anti-corruption disclosure as a necessary evil: impact on profitability and stability of extractive firms in Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emmanuel Tetteh Asare ◽  
King Carl Tornam Duho ◽  
Cletus Agyenim-Boateng ◽  
Joseph Mensah Onumah ◽  
Samuel Nana Yaw Simpson
Keyword(s):  
Financial Stability ◽  
Performance Metrics ◽  
Academic Community ◽  
African Countries ◽  
Content Type ◽  
Return On Equity ◽  
Sigma Convergence ◽  
Catch Up ◽  
Necessary Evil ◽  
Unbalanced Panel Data

Purpose This study aims to examine the effect of anti-corruption disclosure on the profitability and financial stability of extractive firms in Africa. It also tests the convergence of profitability and financial stability. Design/methodology/approach The study uses an unbalanced panel data of 27 firms operating in five African countries covering the period 2006–2018. Anti-corruption assessment is done in line with GRI 205: Anti-Corruption. Profitability is measured using the return on asset and return on equity, whereas the z-score measures financial stability. The study uses the panel-corrected error regression technique for estimation. Findings There is evidence that corruption disclosure reduces the financial stability of firms. Disclosures on corruption analysis and corruption training are the main factors driving the reduction in financial stability. The effect on profitability is not significant except in the case of disclosure on corruption response, which also reduces profitability. There is strong statistical evidence to suggest that profitability and financial stability of extractive firms converge. This suggests that less-performing firms catch up with high performers. Research limitations/implications The study has relevant implications for practitioners, policymakers and the academic community. The study uses data that is skewed towards large extractive firms. Originality/value This study is premier in exploring the effect of anti-corruption disclosure on performance metrics among extractive firms in Africa. It is also unique in providing a test of both beta and sigma convergence of performance among the firms.

The effects of debt restructurings on income inequality in the developing world

2021 ◽  
pp. 135406612110014
Author(s):  
Glen Biglaiser ◽  
Ronald J. McGauvran
Keyword(s):  
Developing Countries ◽  
Panel Data ◽  
Income Inequality ◽  
Income Distribution ◽  
Government Spending ◽  
Tax Reform ◽  
Social Spending ◽  
The Poor ◽  
The Rich ◽  
The Impact

Developing countries, saddled with debts, often prefer investors absorb losses through debt restructurings. By not making full repayments, debtor governments could increase social spending, serving poorer constituents, and, in turn, lowering income inequality. Alternatively, debtor governments could reduce taxes and cut government spending, bolstering the assets of the rich at the expense of the poor. Using panel data for 71 developing countries from 1986 to 2016, we assess the effects of debt restructurings on societal income distribution. Specifically, we study the impact of debt restructurings on social spending, tax reform, and income inequality. We find that countries receiving debt restructurings tend to use their newly acquired economic flexibility to reduce taxes and lower social spending, worsening income inequality. The results are also robust to different model specifications. Our study contributes to the globalization and the poor debate, suggesting the economic harm caused to the less well-off following debt restructurings.

scholarly journals Financial Inclusion, Income Inequality and Sustainable Economic Growth in Sub-Saharan African Countries

2021 ◽  
Vol 13 (4) ◽  
pp. 1780
Author(s):  
Chima M. Menyelim ◽  
Abiola A. Babajide ◽  
Alexander E. Omankhanlen ◽  
Benjamin I. Ehikioya
Keyword(s):  
Economic Growth ◽  
Income Inequality ◽  
Financial Services ◽  
Sub Saharan Africa ◽  
Kuznets Curve ◽  
African Countries ◽  
Financial Access ◽  
Sub Saharan ◽  
Sustainable Economic Growth ◽  
The Impact

This study evaluates the relevance of inclusive financial access in moderating the effect of income inequality on economic growth in 48 countries in Sub-Saharan Africa (SSA) for the period 1995 to 2017. The findings using the Generalised Method of Moments (sys-GMM) technique show that inclusive financial access contributes to reducing inequality in the short run, contrary to the Kuznets curve. The result reveals a negative effect of financial access on the relationship between income inequality and economic growth. There is a positive net effect of inclusive financial access in moderating the impact of income inequality on economic growth. Given the need to achieve the Sustainable Development Targets in the sub-region, policymakers and other stakeholders of the economy must design policies and programmes that would enhance access to financial services as an essential mechanism to reduce income disparity and enhance sustainable economic growth.

Corporate governance practices and capital structure decisions: the moderating effect of gender diversity

2020 ◽  
Vol 20 (5) ◽  
pp. 939-964
Author(s):  
Mohammad A.A Zaid ◽  
Man Wang ◽  
Sara T.F. Abuhijleh ◽  
Ayman Issa ◽  
Mohammed W.A. Saleh ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Capital Structure ◽  
Generalized Method Of Moments ◽  
Gender Diversity ◽  
Business Environment ◽  
Board Structure ◽  
Content Type ◽  
Financing Decisions ◽  
The Impact

Purpose Motivated by the agency theory, this study aims to empirically examine the nexus between board attributes and a firm’s financing decisions of non-financial listed firms in Palestine and how the previous relationship is moderated and shaped by the level of gender diversity. Design/methodology/approach Multiple regression analysis on a panel data was used. Further, we applied three different approaches of static panel data “pooled OLS, fixed effect and random effect.” Fixed-effects estimator was selected as the optimal and most appropriate model. In addition, to control for the potential endogeneity problem and to profoundly analyze the study data, the authors perform the one-step system generalized method of moments (GMM) estimator. Dynamic panel GMM specification was superior in generating robust findings. Findings The findings clearly unveil that all explanatory variables in the study model have a significant influence on the firm’s financing decisions. Moreover, the results report that the impact of board size and board independence are more positive under conditions of a high level of gender diversity, whereas the influence of CEO duality on the firm’s leverage level turned from negative to positive. In a nutshell, gender diversity moderates the effect of board structure on a firm’s financing decisions. Research limitations/implications This study was restricted to one institutional context (Palestine); therefore, the results reflect the attributes of the Palestinian business environment. In this vein, it is possible to generate different findings in other countries, particularly in developed markets. Practical implications The findings of this study can draw responsible parties and policymakers’ attention in developing countries to introduce and contextualize new mechanisms that can lead to better monitoring process and help firms in attracting better resources and establishing an optimal capital structure. For instance, entities should mandate a minimum quota for the proportion of women incorporation in boardrooms. Originality/value This study provides empirical evidence on the moderating role of gender diversity on the effect of board structure on firm’s financing decisions, something that was predominantly neglected by the earlier studies and has not yet examined by ancestors. Thereby, to protrude nuanced understanding of this novel and unprecedented idea, this study thoroughly bridges this research gap and contributes practically and theoretically to the existing corporate governance–capital structure literature.

Does corporate social responsibility affect dividend policy? Empirical evidence in the French context

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olfa Ben Salah ◽  
Anis Ben Amar
Keyword(s):  
Corporate Social Responsibility ◽  
Panel Data ◽  
Social Responsibility ◽  
Dividend Policy ◽  
Least Squares Method ◽  
Positive Impact ◽  
Alternative Measure ◽  
Content Type ◽  
Corporate Social ◽  
The Impact

Purpose The purpose of this paper is to focus on the impact of corporate social responsibility (CSR) on dividend policy in the French context. In addition, the authors seek to determine if the individual components of CSR influence dividend policy. Design/methodology/approach This study uses panel data methodology for a sample of French non-financial firms between 2008 and 2018. Generalized least squares method is used to estimate the models. Findings Using panel data methodology for a sample of 825 observations for the period 2008–2018, this study finds a positive impact of CSR practices on dividend policy. The authors also find that individual components of CSR positively influence dividend policy. To check the robustness of the results, this study further runs a sensitivity tests, including an alternative measure of dividend policy, all of which confirm the findings. Practical implications This study has examined the impact of CSR on dividend policy in France and may have implications for regulatory, investors, analysts and academics. First, the involvement in CSR best practices encourages companies to pay more dividends to investors. Therefore, investors are more motivated to invest in socially responsible firms than socially irresponsible firms. Second, given the association of CSR with the quality of accounting information and financial markets, regulators should step up recommendations relating to the different societal dimensions of CSR. Originality/value While little previous work has focused on the causal link between CSR and dividend policy, this research is the first, to the authors’ knowledge, to have looked at the impact of CSR on dividend policy in France.

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