Economic Growth, Financial Development, and Income Inequality

By Donghyun Park, Kwanho Shin. 2017

116 citations recorded by the source corpus.

ABSTRACT The central objective of our article is to empirically examine the relationship between financial development and income inequality. Theoretically, there are grounds for both a positive and negative relationship between the two variables. Our main finding is that financial development contributes to lower inequality up to a point, but as financial development proceeds further, it contributes to higher inequality. We also find that when the ratio of primary schooling to total schooling increases and law and order improves, financial development becomes more effective in reducing inequality. Finally, we find that financial inclusion is particularly effective in lowering income inequality.

Subfields: Economics and Econometrics, Information Systems, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/91e8123f299f3916880b3c40f8ccf7cb2e0a35a4