Volume 50 (2025)

The Role of Financial Technology on Inequality-informal Economy Nexus

(Pages 118-126)

Author(s)

Margaret Rutendo Magwedere1,* and Godfrey Marozva1
1Department of Finance, Risk Management and Banking, College of Economics and Management Sciences, University of South Africa, 1 Preller Street Mucklenuek, Pretoria, South Africa

DOI: https://doi.org/10.65767/0278-839X.2025.50.12
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Abstract:
The study examined the inequality-informality nexus and the mediating role of financial technology in this relationship across 19 African economies over 2012-2022. Using the pooled mean group approach (PMG), the long run and the short run relationship are determined. The study found that, in the long run, equality improves as informal activities increase. Although financial technology reduces inequality the persistent inequality appears to weaken the inequality reducing effects of financial technology as the moderating term in the long run. The results of the study strengthen the case for government policies to carefully consider the encouragement of using financial technology when the economies are rife with structural rigidities in the informal sector.

Keywords:
Inequality, digital, informal, economy, financial inclusion, sustainable development goals, distribution, income.

JEL Classifications: G21, G23, O32, O33, J24.

Cite this paper:

Margaret Rutendo Magwedere and Godfrey Marozva, The Role of Financial Technology on Inequality-informal Economy Nexus, The Journal of Social, Political and Economic Studies. Volume 50, Year 2025 | PP. 118-126. https://thejspes.com/vol50-a12

© 2025 The Author(s). Published by 'The Journal of Social, Political and Economic Studies'.


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