Non-linearity Effect between Inequality and Financial Development

• Main Authors: Jia feng Lin, 林佳鋒
• Other Authors: 葉志權
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/26453568944965581900

碩士 === 僑光科技大學 === 財務金融研究所 === 104 === This study analyzes the impact of financial development on inequality. The pooled data set used covers 81 countries over the period 1970-2011. The estimation both parametric and partially linear regression functional coefficients are proposed. It was the beginning to discuss the relationship between income distribution and financial development which later on became popular as Kuznets inverted U hypothesis or Kuznets curve. An empirical result discovers that there is dramatic evidence of nonlinearity and there exists an inverted-U or U relation between inequality and financial development, not fully confirming to the Kuznets hypothesis. We spilt the sample as middle-high and low income countries, in low-income samples, we find that as finance develops, market forces first increase then decrease the overall economic inequality of the society, which is illustrated by the inverted U-shape of the Kuznets curve. Thus, it allows us to unravel the possible directions of non-linearity between the development of financial development and inequality and to help us shape future policy-oriented research, and to influence the priority that policy makers attach to reforming financial sector policies.