Abstract
M.Com.
This study empirically invsetigates the impact of financial inclusion on income
inequality in developing and emerging economies. The analysis covers an 11‐year
period from 2004 to 2014 and applies a battery of econometric techniques to
analyse a pool of 53 countries made up of 37 developing and 16 emerging
economies. The study starts off with a pool ordinary least square (OLS) regression,
and progresses to a fixed effects model, then a dynamic panel model specifically the
Arellano & Blundell model. Using three dimensions of financial inclusion: access,
usage and quality, the study finds that financial inclusion reduces inequality and it
is even more effective when interacted with education. The study also found that in
financially inclusive economies, agricultural based economies reduced inequality
while manufacturing and service sector based economies increased inequality.