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The Role of Financial Development in Reducing Income Inequality in Selected Asian Countries

Author

Listed:
  • Wang, Yujue

    (Universiti Putra Malaysia, Selangor Darul Ehsan, Malaysia)

  • Mazlan, Nur Syazwani

    (Universiti Putra Malaysia, Selangor Darul Ehsan, Malaysia)

  • Ngah, Wan Azman Saini Wan

    (Universiti Putra Malaysia, Selangor Darul Ehsan, Malaysia)

  • Faheem, Muhammad

    (Bahauddin Zakariya University, Multan, Pakistan)

Abstract

The present study investigated the effects of financial development on income inequality for three income level groups across 12 Asian countries (areas) from 1980-2020. The three groups comprised countries with low, moderate, and high economic development. Using the Quantile-on-Quantile (QQ) approach, The findings showed that the impact of financial development on income inequality differed across the income level groups of the 12 selected Asian countries. The results suggested that financial development exacerbated income inequality in underdeveloped countries, while for moderately developed countries, financial development promoted income equality. Except for South Korea, the other countries in the high economic development group showed that financial development exacerbated income inequality. Therefore, the impact of financial development on income should be examined by groups, in which moderately-developed countries could devote more attention to promoting income equality through reforms focusing on the development of financial diversification and the enhancement of financial depth.

Suggested Citation

  • Wang, Yujue & Mazlan, Nur Syazwani & Ngah, Wan Azman Saini Wan & Faheem, Muhammad, 2024. "The Role of Financial Development in Reducing Income Inequality in Selected Asian Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 39(3), pages 622-645.
    • Handle: RePEc:ris:integr:0914
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    More about this item

    Keywords

    financial development; income inequality; GINI; QQR;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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