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Income inequality and financial reform in Asia: the role of human capital

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  • Jie Li
  • Han Yu

Abstract

We investigate whether financial reform can reduce income inequality in Asia, with particular emphasis on the role of human capital. Extending Galor and Zeira (1993), we demonstrate that financial reform is effective in reducing income inequality, and the effect is more profound in a country with higher human capital. Using the data for 18 countries in Asia, the region with the most promising financial reform, we confirm our theoretical finding. In addition, among disaggregated financial reforms, lift of credit control, better banking supervision and security market development seem to be significantly associated with reduction of income inequality.

Suggested Citation

  • Jie Li & Han Yu, 2014. "Income inequality and financial reform in Asia: the role of human capital," Applied Economics, Taylor & Francis Journals, vol. 46(24), pages 2920-2935, August.
  • Handle: RePEc:taf:applec:v:46:y:2014:i:24:p:2920-2935
    DOI: 10.1080/00036846.2014.916390
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    References listed on IDEAS

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    3. repec:eee:deveco:v:130:y:2018:i:c:p:113-126 is not listed on IDEAS
    4. Jakob de Haan & Jan-Egbert Sturm, 2016. "How Development and Liberalisation of the Financial Sector is Related to Income Inequality: Some New Evidence," BAFFI CAREFIN Working Papers 1633, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    5. de Haan, Jakob & Sturm, Jan-Egbert, 2017. "Finance and income inequality: A review and new evidence," European Journal of Political Economy, Elsevier, vol. 50(C), pages 171-195.
    6. Abdulnasser Hatemi-J & Mrittika Shamsuddin, 2016. "The causal interaction between financial development and human development in Bangladesh," Applied Economics Letters, Taylor & Francis Journals, vol. 23(14), pages 995-998, September.
    7. repec:agr:journl:v:xxiv:y:2017:i:2(611):p:61-74 is not listed on IDEAS
    8. Sturm, Jan-Egbert & De Haan, Jakob, 2016. "Finance and income inequality revisited," Annual Conference 2016 (Augsburg): Demographic Change 145660, Verein für Socialpolitik / German Economic Association.
    9. repec:eee:ecmode:v:70:y:2018:i:c:p:40-55 is not listed on IDEAS

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