Financial Inclusion and Urban–Rural Income Inequality: Long-Run and Short-Run Relationships

Huang, Youxing; Yan, Zhang

doi:10.1080/1540496x.2018.1562896

Cited by 76 publications

(50 citation statements)

References 28 publications

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“…This finding is in contrast to those of China-specific studies (Zhang, Zhang, and He 2018;Huang and Zhang 2019;Zhang and Posso 2019). While the empirical evidence on the potential inequality-reducing effects of financial inclusion in China is limited, it generally suggests that financial inclusion can contribute to reducing inequality, by facilitating entrepreneurship among the rural poor.…”

Section: Prior Researchcontrasting

confidence: 77%

“…Their findings show that financial inclusion has a positive effect on income, and that this effect is larger for households at the lower quantiles of the income distribution, indicating that it reduces income inequality within rural areas. Financial inclusion has also been found to reduce rural-urban income inequality 5 (Huang and Zhang 2019). Findings by Zhang, Zhang, and He (2018) indicate that digital financial inclusion is positively associated with household income, and this positive association is only significant for rural households.…”

Section: Prior Researchmentioning

confidence: 99%

“…5. Specifically, they find that financial inclusion reduces rural-urban income inequality in the long run, but can increase it in the short term, due to initial disparities between rural and urban areas in terms of access to financial infrastructure and education (Huang and Zhang 2019). 6.…”

Section: Notesmentioning

confidence: 99%

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A theory of financial inclusion and income inequality

Kling

Pesqué‐Cela

Tian

et al. 2020

The European Journal of Finance

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We develop a theory linking financial inclusion, defined as access to formal loans and financial assets, to income inequality. Initial inequality of households is modeled by a random variable determining initial endowments. These initial endowments can be used to invest instantaneously in human capital and financial assets. Human capital translates into income based on a strictly concave production function, suggesting optimal levels of investment. Financial assets earn yields which do not depend on the amount invested by individuals. Theoretical predictions are tested using the China Household Finance Survey (CHFS) for 2011 and 2013. Initial conditions modeled by a random variable are replaced by an actual distribution of income or assets to derive theoretical predictions regarding the proportion of the population that might benefit from financial inclusion. Financial inclusion does mitigate under-investment in education-but formal loans do not contribute. Income inequality worsens if households rely on formal or informal loans, whereas access to bank accounts improves households' prospects in the future income distribution. However, households below the 40th percentile of household income do benefit from informal loans.

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Section: Prior Researchcontrasting

confidence: 77%

Section: Prior Researchmentioning

confidence: 99%

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A theory of financial inclusion and income inequality

Kling

Pesqué‐Cela

Tian

et al. 2020

The European Journal of Finance

View full text Add to dashboard Cite

show abstract

“…In addition, the effects of the control variables on the urban-rural income gap in Tables 4 and 5 have the same directions with the findings of the existing studies (e.g., Huang & Zhang, 2019;Park & Mercado, 2018;Wu & Rao, 2017). Specifically, urbanisation level, agricultural expenditure and financial development are conductive to narrowing the income gap.…”

Section: The Results Of the Threshold Model Estimationsupporting

confidence: 69%

“…The second group studies individual and household characteristics, such as human capital, health, and family structure (Solinger, 1999;Young, 2013). The third group studies macro-socioeconomic factors, such as education expansion (Nie & Xing, 2019), social insurance coverage (He & Sato, 2011), falling labour share (Molero-Simarro, 2017), financial development (Huang & Zhang, 2019), urbanisation (Qiu & Zhao, 2019;Wang, Shao, & Li, 2019) and industrial structure (Yang, Nie, Liu, & Shen, 2018).…”

Section: Introductionmentioning

confidence: 99%

The effect of basic public service on urban-rural income inequality: a sys-GMM approach

Liu

2019

Economic Research-Ekonomska Istraživanja

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Based on provincial panel data of China ranging from 2004 to 2015, this paper has empirically examined the effect of basic public service on the urban-rural income inequality with a system generalised method of moments (sys-GMM). We arrive at the following conclusions: 1) the improvement of public service provision is conducive to narrowing the urban-rural income gap; 2) compared with the 'hard' public services (including infrastructure, environmental protection and cultural facilities), the 'soft' public services (including education, medical care and social security) play a more significant role in reducing the disparity; 3) the household registration system impairs the welfare brought by the 'soft' public services and exacerbates the passive effect of 'hard' public services on the income gap; 4) the interactive impact of household registration regulation and public service provision on the income gap is more significant in developed areas. These findings suggest the government should give priority to the improvement of 'soft' public services, reevaluate the way of spending on 'hard' public services in rural areas and deepen the household registration system reform.

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Financial inclusion: A pathway to economic growth in Sub‐Saharan African economies

Adedokun

Ağa

2021

Int. J Fin Econ

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This study empirically assesses the relationship between financial inclusion and economic growth in Sub‐Saharan African (SSA) countries for the period of 2004–2017, using the generalized method of moments and Dumitrescu–Hurlin's causality test. Based on the multidimensionality of the financial inclusion measures, a principal component analysis was applied to develop a composite index for financial inclusion. The results show that financial inclusion has a significant positive influence on economic growth in SSA countries. Other findings indicate that there is causality running from economic growth to financial inclusion in the short run. Therefore, policymakers should emphasize strategies that foster access to quality and affordable financial services and products, to improve inclusive growth in the continent.

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Financial Inclusion and Urban–Rural Income Inequality: Long-Run and Short-Run Relationships

Cited by 76 publications

References 28 publications

A theory of financial inclusion and income inequality

A theory of financial inclusion and income inequality

The effect of basic public service on urban-rural income inequality: a sys-GMM approach

Financial inclusion: A pathway to economic growth in Sub‐Saharan African economies

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