Economic growth, financial development, and income inequality

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

ACDE Seminar

Date & time

Friday 17 April 2015


Coombs Seminar Room B, HC Coombs Building 9, Cnr Fellows Road and Garran Road, ANU


Dr Donghyun Park, Asian Development Bank.


Arianto Patunru

The central objective of our paper is to empirically examine the relationship between financial development and income inequality. Theoretically, there are grounds for both a positive and negative relationship between the two variables. Our main finding is that financial development contributes to lower inequality up to a point, but as financial development proceeds further, it contributes to higher inequality. We also find that when the ratio of primary schooling to total schooling increases and law and order improves, financial development becomes more effective in reducing inequality. Overall, our results imply that in financially underdeveloped Asia, financial development can help tackle inequality.

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