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Financial development and income inequality in China: an application of SVAR approach

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journal contribution
posted on 2015-01-01, 00:00 authored by Quanda Zhang, Rongda Chen
This paper studies the relationship of financial development and income inequality in China over the period of 1978-2013. Using the structural vector auto-regression (SVAR), the empirical results are consistent with the G-J hypothesis of an inverted U-shaped relationship between financial development and income inequality. An economy in its initial stages of financial development would present increasing inequality and only in a second or even third stage of development would inequality actually decrease. The evidence is valid for two indicators defined to measure the scale and the efficiency of financial development, respectively. Financial reform aimed at forming an appropriate financial system should be accelerated to help to reducing income inequality in China.

History

Journal

Procedia computer science

Volume

55

Pagination

774 - 781

Publisher

Elsevier

Location

Amsterdam, The Netherlands

ISSN

1877-0509

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal; C Journal article

Copyright notice

2015, Elsevier B.V.