Remittances, Financial Inclusion and Income Inequality in Africa

BKWAYEP, NGUEMNANG Yannick Rodrigue and TSAFACK, NANFOSSO Roger (2020): Remittances, Financial Inclusion and Income Inequality in Africa.

Abstract

This paper extends the existing literature on financial inclusion by analyzing the role of financial inclusion (FI) within remittances on income inequality (Gini, Atkinson and Palma-Ratio). It examines whether FI amplifies the reduction in income inequality in a panel of 47 countries over the period 2004-2014. The empirical evidence is based on Generalised Method Moments. We used Five financial inclusion indicators (ATMs for 100,000 adults; banking branches for 100,000 adults; credits: deposits and insurance), remittances and three income inequality variables (Gini index; Atkinson and Palma ratio) as part of this study. The results show that migrant remittances and FI reduce income inequality. The results further indicate that FI implifies the impact of the migrant remittances on income inequality, revealing a complementarity between remittances and FI to reduce income inequality. The complementary action of financial inclusion on migrants' remittances offers wider access to financial services which also leads to an increase in remittances and therefore reduces inequalities.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inequality, Remittances, Financial Inclusion, Africa
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O19 - International Linkages to Development ; Role of International Organizations

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