The present paper seeks to assess the implications of increasing financial sector size on income inequality in eight Asian countries - Hong Kong, India, Indonesia, Japan, Malaysia, the Philippines, Singapore, and South Korea. Adopting a panel data approach, it document a non-linear relation between income inequality and financial sector size in these countries. More precisely, the increasing financial sector size is favourable to equal income distribution only up until a size threshold, beyond which further expansion of the financial sector can worsen income distribution. The analysis further highlights the income-equalizing effect of economic growth and infrastructure development and the income un-equalizing effect of trade and government expenditures. These results are robust to alternative model specifications and to exclusion of a country at a time from the sample.
"FINANCE AND INEQUALITY IN EIGHT ASIAN COUNTRIES: DOES SIZE MATTER?,"
Bulletin of Monetary Economics and Banking: Vol. 21:
1, Article 3.
Available at: https://bulletin.bmeb-bi.org/bmeb/vol21/iss1/3