The Impact of Financial Liberalization Policies on Income Inequality

Fateh Saci
Additional contact information
Fateh Saci: University of Montpellier, Montpellier, France

Journal of Economic Analysis, 2024, vol. 3, issue 1, 99-117

Abstract: This paper examines impacts of China’s financial liberalization policy on income inequality, through three channels: financial scale, financial structure and financial efficiency, an empirical analysis based on panel data of 30 provinces in China from 1996 to 2013 is conducted. The results confirm the Kuznets effect between financial scale, financial structure and income inequality. As the size of the financial sector expands, the financial structure is tilted toward direct financing, and the income gap among residents will experience a "reverse U-shaped" trend that rises first and then falls. Most of China has not yet passed the turning point, and is still in the upper bound of the "inverted U-shaped" curve. Financial liberalization policies will continue to exacerbate income inequality. The impact of financial efficiency on income distribution is quite different in different regions of China. After dividing the whole China into three regions according to the degree of economic development, it is found that the financial efficiency of the eastern and western regions has a Kuznets effect on the income gap, but compared with the eastern region, more provinces and cities in the western region have entered the stage of reducing the income inequality, and the financial development has a great impact on the western region. The effects of financial development on central China are weak, and income inequality increases with financial efficiency.

Keywords: Financial liberalization; urban-rural income gap; Kuznets hypothesis (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.anserpress.org/journal/jea/3/1/48/pdf (application/pdf)
https://www.anserpress.org/journal/jea/3/1/48 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bba:j00001:v:3:y:2024:i:1:p:99-117:d:167

Access Statistics for this article

Journal of Economic Analysis is currently edited by Ramona Wang

More articles in Journal of Economic Analysis from Anser Press
Bibliographic data for series maintained by Ramona Wang ().