Finance And Inequality In Eight Asian Countries: Does Size Matter

Mansor Ibrahim

Bulletin of Monetary Economics and Banking, 2018, vol. 21, issue 1, 33-56

Abstract: The present paper seeks to assess the implications of increasing financial sector size on income inequality in eight Asian countries - Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, and South Korea. Adopting a panel data approach, it document a non-linear relation between income inequality and financial sector size in these countries. More precisely, the increasing financial sector size is favourable to equal income distribution only up until a size threshold, beyond which further expansion of the financial sector can worsen income distribution. The analysis further highlights the income-equalizing effect of economic growth and infrastructure development and the income un-equalizing effect of trade and government expenditures. These results are robust to alternative model specifications and to exclusion of a country at a time from the sample.

Keywords: Income Inequality; Financial Sector Size; Asian Countries (search for similar items in EconPapers)
JEL-codes: C14 G21 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:21:y:2018:i:1:p:33-56

DOI: 10.21098/bemp.v21i1.930

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