The Relationship Between Financial Inclusion and Income Inequality; Evidence From Turkey

ÇALIŞ>, Nevzat; GÖKÇELİ, Emre

doi:10.11611/yead.1177426

Cited by 4 publications

(4 citation statements)

References 23 publications

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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 – 46 ]. For the Turkish economy, there exist limited empirical studies, which mainly suggest a positive effect of financial development on inequality and poverty [ 47 – 55 ]. For instance, while Kar et al (2011) [ 50 ] empirically examine the relationship between financial development and poverty alleviation in Türkiye and conclude that financial development has a limited effect on poverty reduction through economic growth, Koçak 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%

“…Besides, similar to the other studies, Cetin et al ( 2021 ) [ 54 ] conclude that financial development has a positive impact on income inequality for Türkiye, as well. A close idea and methodology with this paper is employed by Calis and Gökçeli (2022) [ 55 ], and they develop a VAR and Granger causality model to analyze the impact of financial inclusion on income inequality in Türkiye and like the other studies in the literature, they find that financial inclusion cause an improvement in the inequality and there is a unidirectional causality is found from financial inclusion to income inequality.…”

Section: Literature On Financial Development Inequality and Povertymentioning

confidence: 99%

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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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Section: Literature On Financial Development Inequality and Povertymentioning

confidence: 99%

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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“…However, no significant relationship was found between these variables in developing Asian countries. Çalış & Gökçeli (2022), who analyzed Türkiye with the VAR approach, found an inverse relationship between financial inclusion and income inequality. Researchers who questioned the direction of causality between the variables revealed that financial participation is the granger cause of lower income inequality.…”

Section: Theoretical and Empirical Literaturementioning

confidence: 99%

“…The relationship between the two variables has recently started to be investigated for Türkiye as well. 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).…”

Section: Introductionmentioning

confidence: 99%

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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