TY - JOUR AU - Thierno Thioune PY - 2017/04/24 Y2 - 2024/03/29 TI - Financial Instability and Inequality Dynamics in the WAEMU JF - Econometric Research in Finance JA - ERFIN VL - 2 IS - 1 SE - Articles DO - 10.33119/ERFIN.2017.2.1.3 UR - https://www.erfin.org/journal/index.php/erfin/article/view/7 AB - This article assesses the effect of financial instability on income inequality and vice versa. The methodology used in this article is based on two approaches: the construction of the synthetic index of financial instability (SIFI) and the panel vector autoregressive (PVAR) approach. The results obtained help to explain that the disparity of income in a West African Economic and Monetary Union (WAEMU) country in each year negatively influences the stability of the financial sector the following year. Functions of impulse responses show that a shock to financial stability has a negative effect on itself and leads to a stable situation after seven periods. A rise in income inequality in WAEMU countries tends to mitigate financial instability at first, before boosting a higher level of instability. Following this increase, inequality will decline, but at a very slow pace. ER -