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Finance and Inequality: The Case of India

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  • James B. 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 article examines how finance impacts 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 exacerbate it. The results are robust to the use of different measures for financial development and financial liberalization.

Suggested Citation

  • James B. Ang, 2010. "Finance and Inequality: The Case of India," Southern Economic Journal, John Wiley & Sons, vol. 76(3), pages 738-761, January.
    • Handle: RePEc:wly:soecon:v:76:y:2010:i:3:p:738-761
    DOI: 10.4284/sej.2010.76.3.738
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    More about this item

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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