Inclusive bank based financial development in countries with special needs: A semiparametric analysis

Monica Das and Sudip R. Basu

Economic Analysis and Policy, 2023, vol. 80, issue C, 740-753

Abstract: What is the role of bank based financial development in inclusive sustainable development? Our paper tries to answer this question with a novel methodology that provides an estimate of the inequality-finance relationship for every country-year observation, allowing us to examine the distribution of the relationship of interest for various country groups. Unlike other papers in the literature, our estimates are free of both functional form mis-specification bias as well as bias from endogenous regressors. Our results indicate that financial development lowers income inequality in low income countries and countries that invest in primary education. This inequality-finance relationship is also sensitive to a country’s size of financial sector and quality of institutions. Our findings should be of particular interest to scholars and domestic policy makers of Countries with Special Needs, who face unique challenges meeting the goals set by United Nation’s 2030 Agenda for Sustainable Development.

Keywords: Inequality; Gini coefficient; Financial development; Semiparametric methods (search for similar items in EconPapers)
JEL-codes: C14 D63 G10 G21 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:80:y:2023:i:c:p:740-753

DOI: 10.1016/j.eap.2023.09.012

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