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Economic Growth, Financial Development and Income Inequality

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  • Donghyun Park

Abstract

The central objective of the paper 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. The finding is that financial development contributes to reducing inequality up to a point, but as financial development proceeds further, it contributes to greater inequality. It is found that when the ratio of primary schooling to total schooling increases and law and order improves, financial development becomes more effective in reducing inequality.

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  • Donghyun Park, 2015. "Economic Growth, Financial Development and Income Inequality," Working Papers id:7247, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:7247
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    References listed on IDEAS

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    4. repec:hal:pseose:halshs-00944873 is not listed on IDEAS
    5. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 9(1), pages 58-73.
    6. Papanek, Gustav F. & Kyn, Oldrich, 1986. "The effect on income distribution of development, the growth rate and economic strategy," Journal of Development Economics, Elsevier, vol. 23(1), pages 55-65, September.
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    Cited by:

    1. Seven, Unal & Coskun, Yener, 2016. "Does financial development reduce income inequality and poverty? Evidence from emerging countries," Emerging Markets Review, Elsevier, vol. 26(C), pages 34-63.
    2. Sugiyanto Catur & Yolanda Zefania, 2020. "The Effect of Financial Deepening on Economic Growth, Inequality, and Poverty: Evidence from 73 Countries," South East European Journal of Economics and Business, Sciendo, vol. 15(2), pages 15-27, December.
    3. Asif Sajid & Amjad Ali, 2018. "Inclusive Growth and Macroeconomic Situations in South Asia: An Empirical Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 7(3), pages 97-109, September.
    4. Yi-Xun Pang & Sin-Huei Ng & Wei-Theng Lau, 2022. "Digital Cashless Payments and Economic Growth: Evidence from CPMI Countries," Capital Markets Review, Malaysian Finance Association, vol. 30(2), pages 63-89.
    5. Moheddine Younsi & Marwa Bechtini, 2020. "Economic Growth, Financial Development, and Income Inequality in BRICS Countries: Does Kuznets’ Inverted U-Shaped Curve Exist?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(2), pages 721-742, June.
    6. Nokulunga Mbona, 2022. "Impacts of Overall Financial Development, Access and Depth on Income Inequality," Economies, MDPI, vol. 10(5), pages 1-23, May.
    7. Thierno Thioune, 2017. "Financial Instability and Inequality Dynamics in the WAEMU," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 2(1), pages 43-62, June.

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