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Finance And Inequality: The Case Of India

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  • James Ang

Abstract

Although theory emphasizes the role of financial market frictions in explaining income inequality, there is little empirical research exploring how financial development and financial sector reforms influence the evolution of income inequality. This paper examines how finance impacts on income inequality in India using annual time series data for over half a century. The results indicate that while financial development helps reduce income inequality, financial liberalization seems to have exacerbated income inequality in India. Our results are robust to the use of different measures for financial development and financial liberalization.

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Bibliographic Info

Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 08/08.

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Length: 25 pages
Date of creation: 02 Apr 2008
Date of revision:
Handle: RePEc:mos:moswps:2008-08

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Keywords: Financial development; financial liberalization; income inequality; India.;

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