Cross-country particularly analyzed sub-Saharan Africa, where both

Cross-country regressions conducted by Aslan and
others (2017) point out that financial inclusion is associated to income
inequality. The study analyzed the impact of inequality (restricted by gender)
in access to finance on income inequality. The current literature looks at the impact
of financial development on poverty and on reducing inequality. Yet, there are
no cross country analysis which examined financial inclusion and income
inequality. The authors particularly analyzed sub-Saharan Africa, where both
gender and income inequality persist more than other regions. The authors
utilized the Findex database to construct an index of financial inclusion. The
authors concluded that at the country level, unequal financial access is
significantly associated with higher income inequality. The authors used the
2011 data for the empirical analysis given that income inequality data are only
available till 2013 with a lag.  They
constructed indices for both 2011 and 2014.

 

Although the theory points out to a link between
financial access and income inequality, the literature has primarily examined
the relationship between financial depth and income inequality. While the
theory is disconcerted on the course of causality between financial development
and income inequality, empirical studies demonstrate robust impact of financial
development on income inequality.  Beck,
Demirguc Kunt and Levine (2007) concluded that financial development
disproportionately enhances the income of the poor and decreases income
inequality.  According to their findings,
financial reforms which aim at diminishing market frictions can increase growth
without distorting redistributive policies. Covering a panel data analysis of
22 sub-Saharan African countries for the years from 1999 to 2004, Batuo and et
al. (2010) found that income inequality decreases, as the countries develop
their financial sector.

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