Financial development and income inequality - evidence from South East Asian countries
Main Article Content
Abstract
As income inequality reduces cohension and belief of the society, it’s important to investigate whether, in a developing economy, financial sector development reduces or worsens income inequality by mobilising and allocating savings into productive investments. The objective of this study is to show how the financial development affects economic in South East Asian developing countries by employing Generalized Method of Moments (GMM) to analyse a panel data of 8 countries spanning from 1992 to 2016. The regression results show an inverted U-shaped relationship between financial sector development and income inequality. Meanwhile, there’s no evidence supporting Kuznets curve of an inverted U-shaped relationship between economic development and inequality. The result also confirm that quality of human resource has significantly negative impact on inequality, that means it plays a significant role in making income distribution more equal. The results have several significant contributions to policy makers of these countries.
Article Details
Keywords
Inequality, financial development, GMM
References
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