Financial Access and Income Inequality in Sub-Saharan Africa: Does Ethnic Fragmentation Give New Evidence?

There is a large body of work documenting the non-consensual effects of financial access on income inequality. Despite this extensive literature and the predominance of ethnic fragmentation in Sub Saharan Africa countries (SSA), little is known about its mediating effect on the above relation. This paper focuses on assessing the effect of ethnic fragmentation on financial access income inequality nexus. Based on Kripfganz and Schwarz's (2019) dynamic panel estimator of time-invariant variables in a sample of thirty-seven (37) SSA countries over the period of 1990-2019, it is observed that ethnic fragmentation hinders financial access to reduce inequality in SSA. The results remain stable following several sensitivity tests related to corruption, urbanization, financial literacy and socio-geographic factors. They are also robust to the use of alternative measures of financial access and to change estimation technique.