Financial Development and Income Inequality in Emerging Markets: A New Approach

Nguyen, Thang Cong; Vu, Tan Ngoc; Vo, Duc Hong; Dao, Ha

doi:10.3390/jrfm12040173

Cited by 28 publications

(17 citation statements)

References 56 publications

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“…Income inequality and economic growth for years has been seen as the major contributor to poverty [16][17][18][19][20][21], and higher initial inequality tends to diminish positive growth, and reduced growth impacts on absolute poverty. Moreover, it is now widely agreed that economic growth alone is not a sufficient condition for achieving the poverty alleviation goal successfully [22].…”

Section: Introductionmentioning

confidence: 99%

Poverty—A Challenge for Economic Development? Evidences from Western Balkan Countries and the European Union

et al. 2020

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During the last few decades, economists have tried to find a solution to eradicate poverty, especially since the United Nations’ Sustainable Development Goals were launched. The target of Goal 1 is to end poverty in all its forms everywhere. While income inequality and unemployment have played a major part in contributing to poor wellbeing in the world, other factors such as political instability, a lack of good investment opportunities, and living conditions have contributed to it as well. Thus, in this work, the authors analyze the factors that impact poverty and compare these results between countries within the European Union and post-communist countries that include the Western Balkan (WB) countries: Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, and Serbia. The method used consists of both descriptive statistics and multiple regression analysis using the fixed effect model where poverty is taken as the dependent variable. The data used in this study are gathered from the World Bank and Legatum Prosperity, during the period between 2009 and 2018. The results show that income inequality does indeed impact the further progress of poverty for both the EU and WB, while economic development in terms of GDP is shown to have a more significant impact on EU than in WB, where the most significant impact was through income per capita. Other factors such as education, investment environment, and especially unemployment also significantly impacted on decreasing the poverty rate in both economic zones.

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Section: Introductionmentioning

confidence: 99%

Poverty—A Challenge for Economic Development? Evidences from Western Balkan Countries and the European Union

et al. 2020

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“…The study applied the ARDL and confirmed the GJ hypothesis for the Iranian economy and showed a nonlinear relationship between FMD and income inequality and between globalization and income inequality. Using panel cointegration on a sample period from 1961 to 2017 for 21 emerging economies, Nguyen et al [33] confirmed the GJ Hypothesis's evidence in pre-tax and post-tax income samples. The study showed that FMD and inequality had an inverted U-shaped relationship.…”

Section: The Impact Of Macroeconomic Factors On Income Inequalitymentioning

confidence: 85%

Investment Portfolio, Democratic Accountability, Poverty and Income Inequality Nexus in Pakistan: A Way to Social Sustainability

et al. 2021

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Institutions help to streamline the economic activity-related procedures, where government intervention might be involved. Institutions also play a significant role in social sustainability. The findings using the Autoregressive Distributed Lag approach to cointegration for the period from 1984–2019 reveal that investment portfolio and democratic accountability reduce poverty in Pakistan both in the long and short run. Moreover, democratic accountability helps to reduce income inequality, but the investment portfolio’s role is not significant. The literacy rate helps to reduce income inequality, and inflation increases poverty and income inequality. The remittances increase income inequality, and urbanization increases poverty. To eradicate poverty and income inequality, the governments should be accountable for their actions to the general public while they remain in power. If they do not deliver as per their manifestoes, they will not be reelected in the next election. Moreover, there is a dire need to redefine the role of an investment portfolio to reduce the risk of investment. So, investments would increase economic activities and could reduce poverty and income inequality. This study contributes to the literature by inquiring about the role of the investment portfolio and democratic accountability in social sustainability by reducing poverty and income inequality. This study only considers Pakistan’s economy due to limitations of poverty data availability in other countries. The scope could further be broadened by accessing data for a wider Asia region to test the role of the investment portfolio and democratic accountability to reduce poverty and income inequality.

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“…The financial development index reported from the IMF has been used as a proxy for financial development in our analysis. However, financial development is a multifaced phenomenon, and previous analyses have used different financial development proxies [ 54 , 55 ]. In this section, we use other indicators as the proxies for financial development.…”

Section: Empirical Findingsmentioning

confidence: 99%

Economic growth, renewable energy and financial development in the CPTPP countries

Tran²,

Tran³

2022

PLoS ONE

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The trade agreement is generally considered an effective mechanism to encourage trading activities. However, trade activities may lead to environmental degradation because more trade is generally associated with more energy consumption. In addition, financial development with an increased flow of capital among members is required to fund trading activities. Renewable energy can be a moderating factor to balance the effects of trade activities and financial development on the economy and the environment. This paper focuses on the inter-relationship between growth-energy-finance nexus for the CPTPP members in the 1971–2020 period. While the energy-growth-environment nexus has been extensively investigated, the energy-growth-finance relationship has been largely ignored in existing literature, particularly for the CPTPP countries. Our findings can be summarized as follows. First, we find that renewable energy consumption does reduce CO2 emission while financial development does not necessarily increase environmental degradation. Second, financial development is found to cause renewable energy usage bilaterally. Finally, when different proxies are used for financial development, a bilateral causality relationship between renewable energy usage, financial development and economic growth is confirmed. These important findings imply that the governments of the CPTPP countries should encourage renewable energy usage to achieve the dual objectives from the CPTPP trade agreement: (i) to increase trade activities; and (ii) to support further financial development within the region. These two objectives together support economic growth.

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Financial Development and Income Inequality in Emerging Markets: A New Approach

Cited by 28 publications

References 56 publications

Poverty—A Challenge for Economic Development? Evidences from Western Balkan Countries and the European Union

Poverty—A Challenge for Economic Development? Evidences from Western Balkan Countries and the European Union

Investment Portfolio, Democratic Accountability, Poverty and Income Inequality Nexus in Pakistan: A Way to Social Sustainability

Economic growth, renewable energy and financial development in the CPTPP countries

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