THE EFFECT OF FINANCIAL DEVELOPMENT ON POVERTY AND INEQUALITY IN AFRICAN COUNTRIES*

Understanding the factors that are important in determining poverty and inequality is one of the steps in the fight to eradicate poverty in the world. In this paper we examine the effect of financial development on poverty and inequality in African countries. The empirical results indicate that financial development has not had a significant effect on poverty and inequality in African countries. Our results confirm the deficiencies in African financial systems and highlight the fact that more efforts need to be done to improve access of poor households and small and medium enterprises to financial services.