The Effects of Financial Development, Democracy and Human Capital on Income Distribution in Developing Countries: Does Financial Kuznets Curve Exists?

SAYAR G., ERDAŞ M. L., Destek G.

JOURNAL OF APPLIED ECONOMICS AND BUSINESS RESEARCH, cilt.10, sa.2, ss.76-95, 2020 (ESCI) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 10 Sayı: 2
  • Basım Tarihi: 2020
  • Dergi Adı: JOURNAL OF APPLIED ECONOMICS AND BUSINESS RESEARCH
  • Derginin Tarandığı İndeksler: Emerging Sources Citation Index (ESCI)
  • Sayfa Sayıları: ss.76-95
  • Anahtar Kelimeler: Financial Kuznets Hypothesis, Financial Development, Income Inequality, Democracy, Human Capital, Panel Data Analysis, FMOLS, INEQUALITY, TESTS, COINTEGRATION, REGRESSION, CAUSALITY, EDUCATION, IMPACT
  • Akdeniz Üniversitesi Adresli: Evet

Özet

Although there are many empirical studies examining the effects of financial development on economic growth performance of countries, the effects of the increased national income as a result of financial development on the low-income segments of society and income distribution is mostly ignored. In addition, it is also well-known fact that there are contradictory arguments about the impact of financial development on income distribution. To this end, this study aims to examine the validity of the financial Kuznets hypothesis for the period of 1990-2013 for 23 developing countries. In this direction, it is aimed to examine the effects of economic growth, democracy, human capital and financial development on income inequality. For this purpose, panel unit root, panel cointegration, panel FMOLS long-run coefficient estimator and panel causality tests are used to examine the relationship between mentioned variables. As a result of the empirical analyses, it was observed that when the findings are evaluated on the basis of the panel, increasing national income, democracy level and human capital accumulation reduces income inequality. Furthermore, it was determined that there is U-shaped relationship between financial development and income inequality, and therefore the existence of financial Kuznets hypothesis was not confirmed.