Financial inclusion in Turkey: unpacking the provincial inequality and its determinants

Takmaz, Sefa; Sarı, Erkam; Alataş, Sedat

doi:10.1080/13504851.2022.2141442

Cited by 11 publications

(4 citation statements)

References 39 publications

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“…In the study conducted by Çalış & Gökçeli (2022), it was revealed that financial inclusion reduces income inequality. In another study on Türkiye, no clear relationship was found between the two variables (Takmaz et al, 2022). The limited number of studies is not sufficient to reveal the effect of financial inclusion on income inequality in Türkiye.…”

Section: Introductionmentioning

confidence: 90%

Does Financial Inclusion Improve Income Equality? The Case of Türkiye

Erkişi,

Boğa

2023

Economics

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Income inequality has become an important economic and humanitarian problem for both advanced and emerging economies, especially with the increase in financialization trends. The equitable distribution of income has garnered attention in both developed and developing nations, given the rise in global trade and production. However, limited research has explored the impact of financial inclusion on income inequality. To address this gap, this study investigated the effect of financial inclusion on income inequality in Türkiye, contributing to the very limited literature. In this study, the financial inclusion variable is measured using a six-dimensional index encompassing financial institutions and financial markets with depth, access, and availability sub-dimensions. During the time frame spanning from 1980 to 2021, estimations of parameters are conducted employing cointegration regression techniques, including FMOLS, DOLS, and CCR. The analysis revealed that inflation, per capita income, urbanization, and financial inclusion have a negative impact on income equality, whereas education has a positive impact. A 1% rise in financial inclusion is associated with a proportional rise in income inequality of approximately 0.012%. Contrary to the findings of previous empirical studies in general, the increase in financial inclusion in Türkiye has a distorting effect on income equality. The findings of this study offer important implications for Türkiye. While the relationship between the financial inclusion indicator and income inequality is not negative, increasing the income of low-income groups across all financial sectors is likely to improve income equality.

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Section: Introductionmentioning

confidence: 90%

Does Financial Inclusion Improve Income Equality? The Case of Türkiye

Erkişi,

Boğa

2023

Economics

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“…Cross-country cases, panel data, and country-specific studies have been employed to observe the linkage between financial development, inequality, and poverty [7,25,[33][34][35][36][37][38][39][40][41][42][43][44][45][46]. For the Turkish economy, there exist limited empirical studies, which mainly suggest a positive effect of financial development on inequality and poverty [47][48][49][50][51][52][53][54][55]. For instance, while Kar et al (2011) [50] empirically examine the relationship between financial development and poverty alleviation in Tu ¨rkiye and conclude that financial development has a limited effect on poverty reduction through economic growth, Koc ¸ak and Uzay (2019) [51] emphasize the impact of financial development on inequality and suggest that it has a significant impact in the long term.…”

Section: Literature On Financial Development Inequality and Povertymentioning

confidence: 99%

The impact of financial development on income inequality and poverty

Bayar

2023

PLoS ONE

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The Turkish economy has undergone a structural transformation with impressive economic performance during 2002–2018 and then a slowdown. The implementation of policies on the financial markets results in a significant capital inflow, which leads to an increase in the volume of domestic credit. Despite improvements in Türkiye, income inequality and poverty are still relatively high. While much of the literature shows that financial development accelerates growth, there is no consensus on its clear impact on poverty and inequality. While some studies stress that financial development improves inequality and combats poverty by increasing the ability of advantage of new investment opportunities, and by improving the allocation of capital, others point out that the beneficial impact of financial development depends on whether the overall population or the upper-income groups benefit or not. Therefore, this paper aims to empirically investigate the impact of financial development on inequalities and poverty during the 2002–2017 period when Türkiye relatively has been prosperous. According to simultaneous equation regression findings, the widening of the financial sector leads to more equal income distribution and poverty alleviation.

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“…There are also disparities in inclusive finance between provinces within countries. For example, financial inclusion is better developed in the western provinces of Turkey compared to the eastern provinces [33]. Evidence suggests that the positive correlation between fintech development and financial inclusion is heterogeneous across the 16 largest emerging economies in the world [34].…”

Section: Literature Reviewmentioning

confidence: 99%

The Structural Causes and Trend Evolution of Imbalance and Insufficiency of Development of Digital Inclusive Finance in China

et al. 2023

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In this paper, to provide references for coordinating the development of digital inclusive finance between provinces and regions in China, we measure the digital financial inclusion index of 31 provinces in China from 2011 to 2020 based on three dimensions: coverage breadth, depth of use and digitalization degree. By means of the weighted Dagum Gini coefficient and quantile standardization, we explored the degree of imbalance and insufficiency of the development of digital inclusive finance in China and four major regions and its structural causes. Using the Kernel density estimation method and Markov chain analysis method, we further investigate the evolution trend of imbalance and insufficiency. The study finds that (1) the Digital Inclusive Financial Index in China and the four major regions rose significantly, with the COVID-19 epidemic reducing its growth rate. Of these, the eastern region has the highest development level. (2) The imbalance level of digital inclusive finance development obviously has reduced. The level of imbalance is highest within the eastern region, and the development gap between the eastern and western regions is the widest. The imbalance of overall development is mainly due to regional imbalance. The imbalance of coverage breadth and depth of use is the main structural cause of unbalanced development in the four major regions. There is a trend of bipolarization or multipolarization in China and the other three major regions, with the exception of the central region. (3) The western region is the least developed. The development shortcoming of digital inclusive finance in China and the four major regions is the breadth of coverage. There are the “Club Convergence” and the “Matthew Effect” in the eastern, central and western regions.

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Financial inclusion in Turkey: unpacking the provincial inequality and its determinants

Cited by 11 publications

References 39 publications

Does Financial Inclusion Improve Income Equality? The Case of Türkiye

Does Financial Inclusion Improve Income Equality? The Case of Türkiye

The impact of financial development on income inequality and poverty

The Structural Causes and Trend Evolution of Imbalance and Insufficiency of Development of Digital Inclusive Finance in China

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