Income inequality and financial development in Southern Africa

The overall objective of this book is to examine the effect of financial development on income inequality in the Southern African Development Community (SADC). We used the Generalized Moments Method (GMM) in dynamic panel data of Blundell and Bond (1998) from data from fourteen (14) SADC member countries observed over the period from 2011 to 2020. The results of the Econometric modeling obtained show a negative effect of financial development by the credit provided to the private sector and the ratio of liquid reserves of banks to assets on income inequality, while the money supply (M2/GDP) has a positive effect on inequality of income. Moreover, these relationships are characterized by unidirectional Granger causality running from financial development to income inequality through the credit provided to the private sector and the liquid reserve ratio of banks.