Economic Growth, Financial Development, and Income Inequality in BRICS Countries: Does Kuznets’ Inverted U-Shaped Curve Exist?
Moheddine Younsi () and
Marwa Bechtini ()
Additional contact information
Moheddine Younsi: University of Sfax
Marwa Bechtini: University of Sfax
Journal of the Knowledge Economy, 2020, vol. 11, issue 2, No 16, 742 pages
Abstract:
Abstract This paper aims to examine the causal relationships between economic growth, financial development, and income inequality in BRICS countries, namely, Brazil, Russia, India, China, and South Africa, using annual panel data covering the period 1990–2015. We construct the financial development index for each country by applying the principal component method on the main four proxies of financial development, i.e., domestic credit provided by banking sector, domestic credit provided to private sector, broad money supply, and stock market capitalization. Our empirical findings provide evidence supporting Kuznets’ inverted U-shaped hypothesis on economic growth and income inequality linkage. We find that the linear term of per capita GDP growth has positive sign and squared term has negative sign and statistically significant at the 1% significance level in all specifications. Moreover, our findings lend support for Kuznets’ inverted U-shaped relationship between financial development and income inequality. We find that the linear terms of all financial development proxies have positive signs and squared terms have negative signs and statistically significant at the 5% significance level in all specifications. Further, the Granger causality test results confirm a unidirectional causality running from all financial development proxies to income inequality and a bidirectional causal relationship between inflation and income inequality is found, while a unidirectional causality running from income inequality to economic growth is found, indicating that income inequality negatively affects economic growth in BRICS countries.
Keywords: Economic growth; Financial development; Income inequality; Kuznets curve; BRICS countries (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)
Downloads: (external link)
http://link.springer.com/10.1007/s13132-018-0569-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
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:spr:jknowl:v:11:y:2020:i:2:d:10.1007_s13132-018-0569-2
Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/13132
DOI: 10.1007/s13132-018-0569-2
Access Statistics for this article
Journal of the Knowledge Economy is currently edited by Elias G. Carayannis
More articles in Journal of the Knowledge Economy from Springer, Portland International Center for Management of Engineering and Technology (PICMET)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().