Economic Growth, Financial Development, and Income Inequality

Donghyun Park, Kwanho Shin

Research output: Contribution to journalArticle

13 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)2794-2825
Number of pages32
JournalEmerging Markets Finance and Trade
Volume53
Issue number12
DOIs
Publication statusPublished - 2017 Dec 2

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Keywords

  • financial development
  • growth
  • income inequality

ASJC Scopus subject areas

  • Finance
  • Economics, Econometrics and Finance(all)

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