Does Financial Sector Development Increase Income Inequality? Some Econometric Evidence from Bangladesh
AbstractThis paper is an attempt to examine the relationship between financial development and income inequality. In doing so, we have used Bangladeshi data for the period 1985-2006. We have employed Autoregressive Distributed Lag (ARDL) methodology for cointegration. We have also carried out sensitivity analysis and stability tests. Our findings suggest that financial development increases income inequality. Economic growth seems to equalize the income distribution. Inflation and trade openness also worsen income inequality. Finally, social spending increases income inequality in the country over the long run. This study provides new directions for policy makers to reduce income inequality to share the fruits of economic development among the wider spectrum of the society.
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Bibliographic InfoArticle provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.
Volume (Year): 47 (2012)
Issue (Month): 1 ()
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Find related papers by JEL classification:
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- D33 - Microeconomics - - Distribution - - - Factor Income Distribution
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
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- Shahbaz, Muhammad & Islam, Faridul, 2011.
"Financial development and income inequality in Pakistan: An application of ARDL approach,"
28222, University Library of Munich, Germany.
- Muhammad Shahbaz & Faridul Islam, 2011. "Financial Development And Income Inequality In Pakistan: An Application Of Ardl Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(1), pages 35-58, March.
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