The Relationship Between Financial Development and Income Inequality in India: Evidence from VARX and ARDL Assessments
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Keywords

Financial development, Income inequality, Financial crisis, Openness, VARX, ARDL, India.

How to Cite

Fukuda, T. . (2017). The Relationship Between Financial Development and Income Inequality in India: Evidence from VARX and ARDL Assessments. Asian Economic and Financial Review, 7(10), 1014–1027. https://doi.org/10.18488/journal.aefr.2017.710.1014.1027

Abstract

We examine the relationship between financial development and income inequality in India over the period 1952-2011 using the cointegration techniques of VARX and ARDL. In addressing India’s “finance-inequality” nexus, we are concerned with finance’s size and efficiency and their linear- and nonlinear effects on income distribution respectively. To consider the influence of India’s exposure to globalization, financial crisis, trade and financial openness are taken into estimation. Our findings are: (i) both financial size and efficiency increase inequality; (ii) economic growth increases, whereas other variables increase inequality; and (iii) the nonlinear effect of financial development is not found.

https://doi.org/10.18488/journal.aefr.2017.710.1014.1027
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