Following Rosenbaum and Rubin (1983), we employ PSM to reconstruct counterfactuals using observational data. In our paper, the key variable of interest, 𝐹 𝑖 (financial inclusion) is binary, thus we can set this as the treatment variable. Using one-to-one matching, Table S1 shows the balancing of the variables before and after matching.After matching, all variables are well balanced, providing a bias of less than 5 per cent (%bias<5%).Moreover, because all t-test are not significant, we cannot reject that null hypothesis that there is no systematic difference between treatment and control groups. Figure S1 shows the histogram of matched sub-samples along common support. It shows that most of the observations are on support.

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This paper studies the relationship of financial development and income inequality in China over the period of 1978-2013. Using the structural vector auto-regression (SVAR), the empirical results are consistent with the G-J hypothesis of an inverted U-shaped relationship between financial development and income inequality. An economy in its initial stages of financial development would present increasing inequality and only in a second or even third stage of development would inequality actually decrease. The evidence is valid for two indicators defined to measure the scale and the efficiency of financial development, respectively. Financial reform aimed at forming an appropriate financial system should be accelerated to help to reducing income inequality in China.

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Using four waves of longitudinal data from the China Family Panel Studies (CFPS), we examine the effects of income inequality on subjective wellbeing (SWB). We take a dual approach in measuring income inequality, and thus, we examine the effects of inequality using province-level Gini coefficient as well as between-group inequality or identity-related inequality defined as the income gap between migrants without urban household registration identity (hukou) and urban residents. We find negative effects of both province-level income inequality and between-group income inequality on SWB, measured by life satisfaction. Our results also show that the effects of income inequality on SWB is stronger for rural hukou residents compared to urban hukou residents. These findings are robust to alternative ways of measuring SWB and income inequality. In addition, we find evidence suggesting that neighbourhood trust is an important channel through which income inequality operates to reduce SWB. We suggest policies that promote trust in communities with high inequality with a view of addressing the negative effects of inequality on SWB.

PurposeBank branching plays a significant role in a wide range of economic activities. Existing studies on determinants of bank branching activities largely focus on developed countries; studies devoted to developing countries are scant. The purpose of this paper is to examine the determinants of bank branching activities in one of the largest developing country India.Design/methodology/approachThe authors employ a unique longitudinal data to study the determinants of bank branch location in India. These data are collected at the state level covering 25 Indian states for the period 2006–2017. The authors employ Poisson regression that are better suited for modeling counted dependent variable.FindingsFirst, region and bank specific factors such as size of population and bank deposits influence location of bank branches. Second, the relationship between these factors and branch locations is heterogeneous across different types of banks and across states with different business environments.Practical implicationsFirst, from the view of banks, considering the factors of branch location are crucial in order to set out branching strategy. Irrespective of policy measures aimed at promoting financial inclusion in India, the authors show that banks consider economic activities in the region in locating their branches. Second, from the view of policy makers and regulators, such branching strategy could potentially contribute to financial exclusion. As a result, population in the less developed regions may be excluded from accessing financial services. Hence, policy makers and regulators should take into this account when formulating policies aimed at promoting financial inclusion.Originality/valueFirst, while existing studies largely focus on developed countries, studies devoted to developing countries are scant. To the best of our knowledge, the authors have not come across any study that investigates the determinants of bank branch location in India, so the authors reasonably believe that this study is a first-of-its-kind. Second, the study provides a new perspective concerning how regional and bank specific factors influence banks of different ownership in locating branches. Third, while traditional regression used to be a method of choice among early studies, the authors employ Poisson regression that is better suited for modeling counted dependent variable.

Purpose -The purpose of this paper is to clarify the relationship between income inequality and financial deepening. The majority of theoretical studies on the relationship between them argue that financial deepening has a positive effect on the income inequality. This paper aims to study the case of China, and explores whether the effects of financial deepening on income inequality varies between urban residents and rural residents. Design/methodology/approach -Using the grey incidence analysis, this paper first calculates the degree of grey incidence between dependent variables, i.e. per capita disposable income of urban residents, per capita net income of rural residents and overall Theil Inequality Index for China, and independent variables, depth of credit, depth of direct financing and depth of insurance. Next, multiple non-linear regression is introduced to build the model. With the method of unit root test and co-integration test, some equations are given to show the clear relationship among the variables. Findings -The empirical results indicate that the development of credit market does not have a strong relationship both with the growth of income and income inequality. While the development of both the direct financing market and the insurance market is closely related to the growth of income and income inequality. Originality/value -The results of this paper suggest that the protection of the rights and interests of medium-sized investors is the key for the capital market. Meanwhile, the insurance market should be encouraged to expand in both breadth and depth, which helps to take full advantage of its functions. As for the credit market, more resources should be allocated to those who need them most the small-and medium-sized enterprises, which will contribute to the growth of the income for the majority and narrowing the income gap.

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