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The Role Of Financial Development On Income Inequality In Malaysia

Author

Listed:
  • Siong Hook Law

    (Department of Economics, Universiti Putra Malaysia)

  • Hui Boon Tan

    (University of Nottingham, Malaysia Campus)

Abstract

This study examines the role of financial development in influencing income inequality in Malaysia over the period of 1980-2000. The empirical results based on ARDL bounds test indicate that financial market development is, at best, very weak and statistically insignificant in reducing income inequality in Malaysia. The evidence is valid for a variety of financial indicators, including the banking sector, the stock market and financial aggregate variables. The evidence also highlights that besides various government¡¯s development programs, efforts should also concentrate on improving institutional quality, economic development and maintaining low inflation in its attempt to combat income inequality.

Suggested Citation

  • Siong Hook Law & Hui Boon Tan, 2009. "The Role Of Financial Development On Income Inequality In Malaysia," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 34(2), pages 153-168, December.
    • Handle: RePEc:jed:journl:v:34:y:2009:i:2:p:153-168
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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