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Financial development and income inequality: evidence from China

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  • Samuel M. Jung
  • Hyungju Edmond Cha

Abstract

This article explored the long-run relationship between financial development and income inequality at the provincial level. In contrast with the intuitive hypothesis that financial deepening helps reduce the inequality, the provincial data reveal that financial deepening cannot improve the inequality. Instead, it makes the inequality worse. Since this result implies that financial development can increase GDP per capita and also increase income inequality, China is not passing the turning point of the inverted U-shaped curve yet. This is consistent to the fact that China is a developing country.

Suggested Citation

  • Samuel M. Jung & Hyungju Edmond Cha, 2021. "Financial development and income inequality: evidence from China," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 26(1), pages 73-95, January.
    • Handle: RePEc:taf:rjapxx:v:26:y:2021:i:1:p:73-95
    DOI: 10.1080/13547860.2020.1717301
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    Cited by:

    1. Cong Minh Huynh & Nam Hoai Tran, 2023. "Financial development, income inequality, and institutional quality: A multi-dimensional analysis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2242128-224, June.
    2. Mduduzi Biyase & Talent Zwane & Precious Mncayi & Mokgadi Maleka, 2023. "Do Technological Innovation and Financial Development Affect Inequality? Evidence from BRICS Countries," IJFS, MDPI, vol. 11(1), pages 1-18, March.
    3. Byron Quito & María de la Cruz del Río‐Rama & José Álvarez‐García & Ronny Correa‐Quezada, 2022. "Impact factors and space‐time characteristics of income inequality in a global sample," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1850-1868, December.
    4. Fugui Li & Weiqi Mu & Siying Li & Xue Li & Jianxin Zhang & Chen Chen & MingJie Zhou, 2022. "Income and Subjective Well-being: Test of a Multilevel Moderated Mediation Model," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 17(4), pages 2041-2058, August.
    5. Mallela, Keerti & Singh, Sunny Kumar & Srivastava, Archana, 2023. "Remittances, financial development, and income inequality: A panel quantile regression approach," International Economics, Elsevier, vol. 175(C), pages 171-186.

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