Does financial development increase rural‐urban income inequality?

Abstract

PurposeThe purpose of this paper is to investigate the impact of financial development on the rural‐urban income inequality in India using annual data from 1965 to 2008.Design/methodology/approachThe Ng‐Perron unit root test is utilised to check for the order of integration of the variables. The long run relation is examined by implementing the ARDL bounds testing approach to cointegration.FindingsThe results confirm a relation among the variables. Evidence suggest that financial development, economic growth and consumer prices aggravate rural‐urban income inequality in the long run.Research limitations/implicationsThe present study offers fresh insights to policy makers on crafting appropriate policies that reduce rural‐urban income inequality in India.Originality/valueThe contribution of this paper is lies in extending the literature in the context of India towards an extensively researched area of rural‐urban divide but in time series framework and utilization of a better approach of time series approach, i.e. ARDL. Specifically, to the best of the authors' knowledge, this is the first empirical study to test poverty‐finance nexus using the basic principles of the GJ hypothesis and provide evidence of short‐ and long‐run dynamics on the postulated relation for India.

Finance and income inequality in Kazakhstan: evidence since transition with policy suggestions

“…This finding is contrary to Tan (2009), Ang (2010). On the other hand, Tiwari et al (2013) for India, Ling-zheng and Xia-hai (2012) for China and Wahid et al (2012) for Bangladesh, establish that financial development impairs income distribution for India, China and Bangladesh respectively. These studies support our empirical evidence.…”

How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective

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The Effect of Financial Literacy and Financial Inclusion on Small Enterprises Performance in East Kalimantan

“…Beberapa penelitian mengenai hubungan akses ke keuangan dan manajemen keuangan telah diidentifikasi sebagai faktor yang paling penting dalam menentukan hidup dan pertumbuhan UKM (Beck dan Demirguc, 2006) berpendapat bahwa akses pembiayaan memungkinkan pelaku usaha mengembangkan sistem ekonomi dan menerapkan investasi secara produktif untuk mengembangkan proses usaha, memperoleh teknologi terbaru yang mendorong daya saing usaha dan meningkatkan inovasi. Pernyataan tersebut didukung oleh Tiwari, et al, (2013) di mana organisasi usaha yang kurang dalam akses pembiayaan ke berbagai sumber pendanaan dapat mengarah pada kondisi kemiskinan (Davidsson, et al, 2010) dan jauh dari sumber lapangan kerja. Penelitian ini dikembangkan dari penelitian Bongomin, et al, (2016); Cihak, et al, (2012) dengan empat pengukuran inklusi keuangan yaitu access, usage, welfare, dan quality.…”