Paper short abstract:

South Africa transited from apartheid to democracy in 1994 but the problem of inequality has persisted. The intermediating role of financial development on the nexus between democracy and income inequality is scarcely being studied in South Africa despite having a relatively high financial system.

Paper long abstract:

South Africa transited from apartheid to popular democracy in 1994 and has since been enjoying the dividends of democracy such as entrenchment of fundamental human rights, freedom of association and freedom to own property for almost three decades. However, the problem of rising inequality has persisted despite practicing the democratic system of government in South Africa which adversely affect economic development and socio-political stability of the country. These inconsistencies resulted in setbacks leading to the problem of high poverty rate of more than 55 percent and unemployment of over 27 percent and youth unemployment of about 50 percent. Addressing this problem remains a concern to scholars and policy makers alike. Although, studies have argued that democracy can ameliorate the problem of income inequality in an economy and that financial development promote democracy and reduce inequality. However, the intermediating role of financial development on the nexus between democracy and income inequality is scarcely being investigated among developing countries especially in South Africa given her relatively high level of financial development. This study intends to fill this gap in the literature. Secondary data on the financial development index, democracy index and Gini-coefficient will be sourced from the World Development Indicators of the World Bank and Freedom House Country and Territory Ratings and Statuses. Data collected will be analyzed using descriptive and econometrics techniques. This is with the view to expand the frontiers of knowledge on the role of financial development on the nexus between democracy and income inequality in South Africa.