Financial Development and Income Inequality in Emerging Markets: A New Approach
1
Business and Economics Research Group, Ho Chi Minh City Open University, Ho Chi Minh City 70000, Vietnam
2
International Economics Faculty, Banking University Ho Chi Minh City, Ho Chi Minh City 70000, Vietnam
*
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2019, 12(4), 173; https://doi.org/10.3390/jrfm12040173
Received: 13 July 2019 / Revised: 6 September 2019 / Accepted: 9 September 2019 / Published: 23 November 2019
(This article belongs to the Special Issue Contemporary Issues in Business and Economics)
Financial development has been considered an efficient and effective mechanism for the sustainable economic growth and development of emerging markets in past decades. However, various concerns have emerged in relation to the influences of financial sector development on income inequality. It is the claim of this paper that findings from the current literature are incomplete. This is because various proxies have been utilized inconsistently for both financial development and income inequality in previous empirical studies. This study extends the current literature on this important finance–inequality nexus by examining a sample of 21 emerging countries for the period of 1961–2017. Various estimation techniques were employed with the aim of ensuring robust findings. Findings from this paper confirm the existence of an inverted U-curve relationship between financial development and income inequality, implying that income inequality may rise at the early stage of financial development and fall after a certain level is achieved. Policy implications have emerged from the findings of this study.
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Keywords:
financial development; income inequality; FMOLS; DOLS; emerging markets
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited
MDPI and ACS Style
Cong Nguyen, T.; Ngoc Vu, T.; Hong Vo, D.; Thi-Thieu Ha, D. Financial Development and Income Inequality in Emerging Markets: A New Approach. J. Risk Financial Manag. 2019, 12, 173.
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