THE ROLE OF FINANCIAL DEVELOPMENT ON INCOME INEQUALITY IN MALAYSIA

Siong Hook Law and Hui-Boon Tan

Journal of Economic Development, 2009, vol. 34, issue 2, 153-168

Abstract: This study examines the role of financial development in influencing income inequality in Malaysia over the period of 1980-2000. The empirical results based on ARDL bounds test indicate that financial market development is, at best, very weak and statistically insignificant in reducing income inequality in Malaysia. The evidence is valid for a variety of financial indicators, including the banking sector, the stock market and financial aggregate variables. The evidence also highlights that besides various government¡¯s development programs, efforts should also concentrate on improving institutional quality, economic development and maintaining low inflation in its attempt to combat income inequality.

Keywords: Banking Sector; Capital Market; Financial Development; Income Inequality; ARDL Bounds Test (search for similar items in EconPapers)
JEL-codes: G21 O15 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (43)

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