Symmetric and asymmetric effects of financial deepening on income inequality in South Africa
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Date
Authors
Biyase, Mduduzi
Chisadza, Carolyn
Journal Title
Journal ISSN
Volume Title
Publisher
Routledge
Abstract
The aim of this study is to examine the financial development-inequality nexus in South Africa from 1980 to 2017, specifically if financial deepening reduces income inequality. The initial results indicate a positive association between financial deepening and income inequality. On further exploration, we find evidence that the Greenwood and Jovanovich hypothesis holds for South Africa. We observe an inverted non-linear relationship between financial deepening and income inequality in the long-run. The results suggest that at early stages of financial development, income inequality increases, but gradually starts to decrease as the financial sector becomes more established in the long-run. The findings highlight the need for policymakers to focus on inclusive financial sector reforms in the early stages of financial development.
Description
Keywords
Financial deepening, Income inequality, Autoregressive distributed lag (ARDL), South Africa (SA), SDG-08: Decent work and economic growth, SDG-10: Reduced inequalities
Sustainable Development Goals
Citation
Mduduzi Biyase & Carolyn Chisadza (2023): Symmetric and asymmetric effects of financial deepening on income inequality in South Africa, Development Southern Africa, vol. 40, no. 5, pp. 961-978, DOI: 10.1080/0376835X.2022.2163226.