Open Access Journal Article

The Impact of Financial Liberalization Policies on Income Inequality

by Fateh Saci a,* orcid
a
University of Montpellier, Montpellier, France
*
Author to whom correspondence should be addressed.
JEA  2024 3(1):48; https://doi.org/10.58567/jea03010005
Received: 7 April 2023 / Accepted: 15 July 2023 / Published Online: 15 March 2024
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Abstract

This paper examines impacts of China’s financial liberalization policy on income inequality, through three channels: financial scale, financial structure and financial efficiency, an empirical analysis based on panel data of 30 provinces in China from 1996 to 2013 is conducted. The results confirm the Kuznets effect between financial scale, financial structure and income inequality. As the size of the financial sector expands, the financial structure is tilted toward direct financing, and the income gap among residents will experience a "reverse U-shaped" trend that rises first and then falls. Most of China has not yet passed the turning point, and is still in the upper bound of the "inverted U-shaped" curve. Financial liberalization policies will continue to exacerbate income inequality. The impact of financial efficiency on income distribution is quite different in different regions of China. After dividing the whole China into three regions according to the degree of economic development, it is found that the financial efficiency of the eastern and western regions has a Kuznets effect on the income gap, but compared with the eastern region, more provinces and cities in the western region have entered the stage of reducing the income inequality, and the financial development has a great impact on the western region. The effects of financial development on central China are weak, and income inequality increases with financial efficiency.

Keywords: Financial liberalization; urban-rural income gap; Kuznets hypothesis;
Copyright: © 2024 by Saci. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
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ACS Style
Saci, F. The Impact of Financial Liberalization Policies on Income Inequality. Journal of Economic Analysis, 2024, 3, 48. https://doi.org/10.58567/jea03010005
AMA Style
Saci F. The Impact of Financial Liberalization Policies on Income Inequality. Journal of Economic Analysis; 2024, 3(1):48. https://doi.org/10.58567/jea03010005
Chicago/Turabian Style
Saci, Fateh 2024. "The Impact of Financial Liberalization Policies on Income Inequality" Journal of Economic Analysis 3, no.1:48. https://doi.org/10.58567/jea03010005
APA style
Saci, F. (2024). The Impact of Financial Liberalization Policies on Income Inequality. Journal of Economic Analysis, 3(1), 48. https://doi.org/10.58567/jea03010005

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