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

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  • Takashi Fukuda

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.

Suggested Citation

  • Takashi Fukuda, 2017. "The Relationship Between Financial Development and Income Inequality in India: Evidence from VARX and ARDL Assessments," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 7(10), pages 1014-1027.
    • Handle: RePEc:asi:aeafrj:v:7:y:2017:i:10:p:1014-1027:id:1614
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    Cited by:

    1. Ratneswary Rasiah & Sotheeswari Somasundram & Geetha Subramaniam, 2018. "A Multivariate Cointegration Analysis of the Macroeconomic Determinants of Carbon Emissions in Malaysia," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 202-208.

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