Effects of financial inclusion on income inequality in WAEMU countries

This study aims to examine the effect of financial inclusion on income inequality in WAEMU countries. The main objective is to analyze the extent to which expanding access to, use of financial services can contribute to reducing economic disparities, and to what extent their effects become marginal or counterproductive. To achieve this objective, an econometric methodology based on panel data will be used, with particular emphasis on estimating a threshold model. The study will test the hypothesis of a non-linear relationship, according to which financial inclusion only begins to significantly reduce inequality beyond a certain critical level. Our empirical results reveal a non-linear relationship between digital infrastructure, financial inclusion, and inequality. Specifically, we find that when the ISIF index exceeds a threshold of 0.36, financial inclusion significantly lowers the Gini coefficient, suggesting that a critical mass of infrastructure is required to catalyze the distributional benefits of financial services.