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Article

Open Access

The Impact of Finance Development on the Income Inequality Between the Urban and the Rural: Evidence From Henan Province in China

Author(s)

ZHENG Quanyuan, LIU Zhilin

Full-Text PDF Download XML 882 Views

DOI:10.17265/2328-7144/2017.05.005

Affiliation(s)

Henan University, Kaifeng, China

ABSTRACT

Finance is one important factor to promote economic development. Meanwhile, it also has a dubious effect on income inequality in accordance with the prior literatures. In order to promote economic development, most of China’s governments provide many policies to boost financial development. However, these policies should also be evaluated with its impact on the income inequality. As one important province in China, Henan also wants to have a rapid economic development with policies on financial development. Therefore, this paper uses the vector autoregressive model to detect the impact of financial development on income inequality between the urban and the rural, and the results suggest one positive impulse on financial development would cause income inequality to be increased immediately, but to be decreased after the fourth period. Thus, Henan’s policies on financial development would achieve the goal to promote economic development without the detrimental effect on income inequality.

KEYWORDS

financial development, income inequality, economic development, vector autoregressive

Cite this paper

Economics World, Sep.-Oct. 2017, Vol. 5, No. 5, 429-434 doi: 10.17265/2328-7144/2017.05.005

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