The Impact of Financial Development on Income Inequality: Evidence from OECD Countries
The financial system has an important component which adds to social welfare. Investment and consumption expenditures contribute to the increase in production by meeting the capital requirement. The study examines the impact of financial development on income inequality for 13 member nations of the...
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| Format: | Article |
| Language: | English |
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Istanbul University Press
2024-04-01
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| Series: | Istanbul Business Research |
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| Online Access: | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/38A92DFE50FC460D96A9EB5B2B6FB58C |
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| author | Çiğdem Karış Dilek Çil |
| author_facet | Çiğdem Karış Dilek Çil |
| author_sort | Çiğdem Karış |
| collection | DOAJ |
| description | The financial system has an important component which adds to social welfare. Investment and consumption expenditures contribute to the increase in production by meeting the capital requirement. The study examines the impact of financial development on income inequality for 13 member nations of the OECD between 1993 and 2017 in light of the panel data method. In the study, income inequality is used as a proxy for the GINI coefficient, while the banks’ domestic credit to the private sector is utilized to represent financial development. In addition, the model utilizes control variables, including per capita income, trade openness, inflation, and public spending. The panel data regression results reveal that financial development has a positive effect on income inequality. The results of the paper support the Income Inequality Widening Hypothesis, which suggests that the situation which favours individuals with high income levels who have access to financial resources continues when financial development increases, which in turn increases income inequality. |
| format | Article |
| id | doaj-art-c5c3b776436e4ce68da3fe340bbb8469 |
| institution | OA Journals |
| issn | 2630-5488 |
| language | English |
| publishDate | 2024-04-01 |
| publisher | Istanbul University Press |
| record_format | Article |
| series | Istanbul Business Research |
| spelling | doaj-art-c5c3b776436e4ce68da3fe340bbb84692025-08-20T02:10:42ZengIstanbul University PressIstanbul Business Research2630-54882024-04-0153110311810.26650/ibr.2024.53.1094981123456The Impact of Financial Development on Income Inequality: Evidence from OECD CountriesÇiğdem Karış0https://orcid.org/0000-0002-7534-0494Dilek Çil1https://orcid.org/0000-0002-8242-1970Trabzon Üniversitesi, Trabzon, TurkiyeTrabzon Üniversitesi, Trabzon, TurkiyeThe financial system has an important component which adds to social welfare. Investment and consumption expenditures contribute to the increase in production by meeting the capital requirement. The study examines the impact of financial development on income inequality for 13 member nations of the OECD between 1993 and 2017 in light of the panel data method. In the study, income inequality is used as a proxy for the GINI coefficient, while the banks’ domestic credit to the private sector is utilized to represent financial development. In addition, the model utilizes control variables, including per capita income, trade openness, inflation, and public spending. The panel data regression results reveal that financial development has a positive effect on income inequality. The results of the paper support the Income Inequality Widening Hypothesis, which suggests that the situation which favours individuals with high income levels who have access to financial resources continues when financial development increases, which in turn increases income inequality.https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/38A92DFE50FC460D96A9EB5B2B6FB58Cfinancial developmentincome inequalityoecd countriespanel data analysis |
| spellingShingle | Çiğdem Karış Dilek Çil The Impact of Financial Development on Income Inequality: Evidence from OECD Countries Istanbul Business Research financial development income inequality oecd countries panel data analysis |
| title | The Impact of Financial Development on Income Inequality: Evidence from OECD Countries |
| title_full | The Impact of Financial Development on Income Inequality: Evidence from OECD Countries |
| title_fullStr | The Impact of Financial Development on Income Inequality: Evidence from OECD Countries |
| title_full_unstemmed | The Impact of Financial Development on Income Inequality: Evidence from OECD Countries |
| title_short | The Impact of Financial Development on Income Inequality: Evidence from OECD Countries |
| title_sort | impact of financial development on income inequality evidence from oecd countries |
| topic | financial development income inequality oecd countries panel data analysis |
| url | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/38A92DFE50FC460D96A9EB5B2B6FB58C |
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