Abstract
This study investigated the relationship between financial development and income inequality in
ECOWAS nations from 1986 to 2023. ARDL / PMG non-linear panel approach was used in the
study, which used secondary data from the World Development Indicators (WDI). The dependent
variable is income inequality of the ten countries chosen to represent the ECOWAS in this study
base on availability of data, they are: Ghana, Guinea, Senegal, Liberia, Mali, Niger, Nigeria, and
Cote d'Ivoire. The explanatory variables include; real income, inflation, government spending
financial sector development. The findings showed a strong long-term link between real income,
inflation, government spending financial sector development, and income inequality in ECOWAS
member states. The findings showed that real income had a favorable and considerable short-term
impact on income inequality in all ECOWAS countries. On the other hand, inflation is negatively
correlated with income inequality. Furthermore, there is a weak and inverse relationship between
government expenditure and income inequality in ECOWAS countries. Income inequality and
financial sector development are positively correlated. Based on the result of our findings the
recommend that government of ECOWAS countries should create a good financial environment
to enable the poor to reach a better life opportunity. For this, regulations that make financial
resources difficult to access should be audited and access to capital should be facilitated. Thus,
entrepreneurial activities may develop and productivity increases throughout the economy.
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