Journal
SINGAPORE ECONOMIC REVIEW
Volume 63, Issue 1, Pages 167-184Publisher
WORLD SCIENTIFIC PUBL CO PTE LTD
DOI: 10.1142/S0217590818410047
Keywords
Income distribution; income inequality; Kuznets curve; financial development; financial deepening; financial inclusion
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In this paper, we assess empirically whether financial inclusion contributes to reducing income inequality when controlling for other key factors, such as economic development and fiscal policy. We conclude that financial inclusion contributes to reducing income inequality to a significant degree, while the size of the financial sector does not. Although our results are still preliminary and constrained by data limitations, they still bear significant policy implications. More specifically, fostering financial inclusion has one more important by-product, which had hardly been analyzed yet, namely reducing income inequality. More specifically, given the broad definition of financial inclusion used in our analysis, promoting financial inclusion implies facilitating the use of credit to low-income households, as well as granting credit to small and medium-sized enterprises.
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