Simplice A., Asongu (2011): Investment and inequality in Africa: which financial channels are good for the poor?
Download (189kB) | Preview
This paper examines how domestic, foreign, private and public investments affect income-inequality through financial intermediary dynamics of depth, efficiency, activity and size. With the exception of financial allocation efficiency, financial channels of depth and activity are good for the poor as they diminish estimated household income-inequality. Financial size does not have a significant income-redistributive effect. Financial allocation efficiency has a disequalizing effect on income-distribution; implying policies designed to improve the allocation of mobilized funds to economic agents only benefit the rich to the detriment of the poor. The use of financial and investment dimensions previously missing in the literature provide new insights into the two contrasting theories in the finance-inequality nexus.
|Item Type:||MPRA Paper|
|Original Title:||Investment and inequality in Africa: which financial channels are good for the poor?|
|Keywords:||Finance; Investment; Poverty; Inequality; Africa|
|Subjects:||I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I30 - General
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25 - Aggregate Factor Income Distribution
O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa
D - Microeconomics > D6 - Welfare Economics > D60 - General
G - Financial Economics > G2 - Financial Institutions and Services > G20 - General
|Depositing User:||Simplice Anutechia Asongu|
|Date Deposited:||25. Nov 2011 12:46|
|Last Modified:||12. Feb 2013 22:18|
Acemoglu, D., & Robison, J.A.,(2005). Economic Origins of Dictatorship and Democracy. Cambridge University Press.
Aghion, P., & Bolton, P., (2005). “A theory on trickle-down growth and development”. Review of Economic Studies, 64(2), pp.151-172.
Akerlof, G., & Romer, P.,(1993). “Looting: The economic underworld of bankruptcy for profit”. Brookings Papers on Economic Activity, 2, pp.1-73.
Asongu, S.A., (2011a). “New financial intermediary development indicators for developing countries”. MPRA Paper No. 30921.
Asongu, S.A., (2011b). “Law, finance, economic growth and welfare: why does legal origin matter?”. MPRA Paper No.33868.
Asongu, S.A.,(2011c). “Financial determinants of human development in developing countries”. MPRA Paper No. 33949.
Asongu, S.A.,(2011d). “Law, finance and investment: does legal origin matter?”, MPRA Paper No.34698.
Ayyagari, M., Demirgüç-Kunt, & A., Maksimovic, V.,(2006). “How important are financing constraints? The role of finance in the business environment”. Working Paper No. 3820. The World Bank Policy Research, Washington D.C.
Banerjee, A.V., & Newman, A.F., (1993). “Occupational Choice and the Process of Development,” Journal of Political Economy, 101(21), pp.274-298.
Banerjee, A.V., & Duflo, E., (2005). “Growth theory through the lens of development economics”. In: Handbook of Economic Growth, 1, pp. 473–552.
Barro, R. J. (1991). “Economic growth in a cross section of countries”, Quarterly Journal of Economics, 106(2), pp.407-443.
Batuo, M.E., Guidi, F., & Mlambo, K., (2010, August). “Financial Development and Income Inequality: Evidence from African countries”, African Development Bank.
Beck, T., Demirgüç-Kunt, A., & Levine, R.,(2003). “Law and finance: why does legal origin matter?”, Journal of Comparative Economics, 31, pp. 653-675.
Beck, T., Demirgüç-Kunt, A., & Levine, R.,(2004, June). “Finance, Inequality and Poverty: Cross-country Evidences”, World Bank Policy Research Working Paper No.3338.
Beck, T., Demirgüç-Kunt, A., & Levine, R.,(2007). “Finance, inequality and the poor”, Journal of Economic Growth, 12(1), pp.27-49.
Beck, T., Demirgüç-Kunt, A., & Maksimovic, V., (2005). “Financial and legal constraints to growth: Does firm size matter?”, Journal of Finance, 60(1), pp. 137-177.
Ben-David, D. (1998). “Convergence clubs and subsistence economies”, Journal of Development Economics, 55, pp. 155-177.
Berger, A., & Udell, G., (1998). “The economics of small business finance: The roles of private equity debt markets in the financial growth cycle”, Journal of Banking and Finance, 22(6), pp.613-673.
Brown, C., & Dinc, S.,(2004). “The politics of bank failures: Evidence from emerging markets”. Quarterly Journal of Economics, 120(4), pp.1413-1444.
Chinn, M., & Ito, H., (2006). “What matters for financial development? Capital controls, institutions and interactions”, Journal of Development Economics, 81, pp.163-192.
Claessens, S., Djankov, S., Fan, J., & Lang, L.,(2002). “Disentangling the incentive and entrenchment effects of large shareholdings”, Journal of Finance, 57(6), pp. 2741-2771.
Claessens, S., & Feijen, E.,(2006). “Finance and hunger: Empirical evidence of the agricultural productivity channel”, Working Paper No. 4080. The World Bank Research, Washington, DC.
Claessens, S., & Feijen, E.,(2007). “Financial development and the millennium development goals”, Working Paper No. 89.The World Bank, Washington, DC.
Claessens, S., & Perotti, E.,(2007). “Finance and inequality: Channels and evidence”, Journal of Comparative Economics, 35(4), pp. 748-773.
Claessens, S., & Pohl, G.,(1995). Banks, capital markets and corporate governance: Lessons from Russia for Eastern Europe. In: Simoneti, Marko, Kawalec, Stefan(Eds), Bank Rehabilitation and Enterprise Restructuring. The World Bank, CEEPN.
Clarke, G.R.G., Cull, R., Soledad, M. P.M., & Sanchez, S.M., (2003). “Foreign bank entry: Experience, implications for developing countries”. World Bank Research Observer, 18, pp.25-59.
Demirguc-Kunt, A., Beck, T., & Levine, R., (1999). “A New Database on Financial Development and Structure”, International Monetary Fund, WP 2146.
Das, M., & Mohapatra, S.,(2003). “Income inequality: The aftermath of stock market liberalization in emerging markets”, Journal of Empirical Finance, 10, pp.217-248.
Dinc, S.,(2004). Government ownership of banks and political lending in developing countries. Mimeo, University of Michigan.
Dollar, D., & Kraay, A.,(2002). “Growth is Good for the Poor”, Journal of Economic Growth, 7, pp. 195-225.
Dooley, M.P.,(2000). “A model of crises in emerging markets”, Economic Journal, 110, pp.256-272.
Galbraith, J.K., & Lu, J., (1999). Inequality and financial crises: Some early findings. Working Paper, No.9, UTIP.
Galor, O., & Moav, O., (2004). “From physical to human capital accumulation: Inequality and the process of development”, Review of Economic Studies, 71(4), pp.1001-1026.
Galor, O., & Zeira, J., (1993). “Income Distribution and Macroeconomics”, Review of Economics, 60(1), pp.35-52.
Glaeser, E.L., Scheinkman, J., & Shleifer, A.,(2003).“The injustice of inequality”, Journal of Monetary Economics, 501, pp.199-222.
Greenwood, J., & Jovanovic, B.,(1990). “Financial development, growth and the distribution of income”, Journal of Political Economy, 98(5), pp.1076-1107.
Haber, S., & Kantor, S.,(2004, June). Getting privatization wrong: The Mexican banking system, 1991-2003. Mimeo. Stanford University.
Haber, S., & Razo, A., & Mauer, N.,(2003). The Politics of Property Rgihts: Political Instability, Credible Commitments and Economic Growth in Mexico, 1876-1929. Cambridge University Press.
Hassan, K., Sanchez, B., & Yu, J., (2011). “Financial development and economic growth: New evidence from panel data”, The Quarterly Review of Economics and Finance, 51, pp.88-104.
Henry, P.B.,(2000a). “Stock market liberalization, economic reform and emerging market equity prices”, Journal of Finance, 55(2), pp.529-564.
Henry, P.B.,(2000b). “Do stock market liberalization cause investment booms?”, Journal of Financial Economics, 58(1-2), pp.301-334
Henry, P.B.,(2003). “Capital account liberalization, the cost of capital and economic growth”, American Economic Review, 93(2), pp. 91-96.
Henry, P.B.,(2006). “Capital account liberalization: Theory, evidence and speculation”, NBER Working Paper No.12698.
Honohan, P., (2006). “Household financial assets in the process of development”, Working Paper No.3965. The World Bank Policy Research. Washington, D.C.
Janine, A., & Elbadawi, I.A.,(1992). “Parallel Markets, the foreign Exchange Auction, and Exchange Rate Unification in Zambia”, World Bank Policy Working Paper No. 909, The World Bank.
Kai, H., & Hamori, S., (2009). “Globalization, financial depth and inequality in Sub-Saharan Africa”, Economics Bulletin, 29 (3), pp. 2025-2037.
Khwaja, A.I., & Mian, A.,(2005). “Unchecked intermediaries: Price manipulation in an emerging stock market”, Journal of Financial Economics, 78(1),pp. 203-241.
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R.W., (2000), “ Investor protection and corporate governance”, Journal of Financial Economics, 58(1), pp.3-27.
La Porta, R., Lopez-de-Silanes, F., & Zamarippa, G.,(2003). “Related lending”, Quarterly Journal of Economics, 118(1), pp.231-268.
Levine, R., & Zervos, S.,(1996). “Stock market development and long-run growth”, World Bank Economic Review, 10(2), pp.323-339.
King, R.,& Levine, R.,(1993). “Finance and growth: Schumpeter might be right”, Quarterly Journal of Economics, 108, pp.717-738.
McKinnon, R., (1973). Money and Capital in Economic Development. Brookings Institution Press, Washington DC.
Ndikumana, L., (2000). “Financial Determinants of Domestic Investment in Sub-Saharan Africa: Evidence from Panel Data”. World Development, 28(2), pp.381-400.
Perotti, E., (2002). “Lessons from the Russian meltdown: The economics of soft legal constraints”, International Finance, 5(3), pp.359-399.
Perotti, E., & Volpin, P., (2007). Investor protection and entry. Mimeo. University of Amsterdam. London Business School.
Rajan, R., & Zingales, L., (2003). “The great reversals: The politics of financial development in the twentieth century”, Journal of Financial Economics, 69(1), pp.5-50.
Shaw, E.,(1973), Financial Deepening in Economic Development, New York, Oxford University Press.
Velasco, A.,(1988). “Liberalization, crisis, intervention. The Chilean financial system, 1975-1985”, IMF Working Paper 1988/66.
Valdes-Prieto, S.,(1992). Financial liberalization and the capital account: Chile 1974-1984. In: Caprio et al.(Eds), The Impact of Financial Reform. The World Bank, Washington, D.C.