nequality and economic growth into a positive relationship.
It is well known that, as income inequality in a country grows, it has an increasingly negative effect
on that country, and we can see this in low-income countries. Hence, tax progressivity has been
considered a useful policy tool for reducing income inequality, and such a tool is usually effective in
developed countries (i.e., high-income countries) because they have more tax revenue and stronger tax
policies than low-income countries. Our empirical results show this.
Some possibilities for reducing income inequality through financial inclusion—that is, improving
financial accessibility—have recently emerged in low-income countries. In this article, we find that
reducing income inequality through financial inclusion has a positive effect on economic growth, more
so in low-income countries; that is, if financial accessibility is improved in low-income countries, it is
possible to reduce income inequality and thus reverse the negative relationship between income
inequality and economic growth.
These results should be of great interest to policy makers in both developed and developing
countries, given the number of programs being designed to increase financial inclusion for those
who are currently excluded from accessing financial resources. If policy makers can improve financial
accessibility in low-income countries by even a modest amount, it can be more effective than tax
progressivity in reducing income inequality, and it can lead to higher economic growth in those
countries.