Exploring the Impact of Financial Development on Inequality: Evidence from Three Asian Countries


  • Abdul Qayyum Khan Department of Management Sciences, COMSATS University Islamabad, Wah Campus, Pakistan
  • Muhammad Haroon Hafeez Institute of Management Sciences, Bahauddin Zakariya University, Multan, Pakistan
  • Naima Saleem Department of Management Sciences, COMSATS University Islamabad, Wah Campus, Pakistan
  • Muhammad Azam Department of Management Sciences, Abdul Wali Khan University Mardan, KPK-Pakistan




Financial development, inequality, developing Asian countries


The broad objective of the present study is to investigate the impact of financial development along with some other variables namely GDP per capita, in?ation rate, human capital, and trade openness for three developing Asian countries- Bangladesh, India and Pakistan. Annual time series data during the period 1980-2014 have been used for empirical investigation. After employing appropriate tests and estimation techniques, it is found that the financial development is statistically insignificant for all three countries, it implies that yet these developing countries are not efficiently allocating domestic private credit to poor segments of population. The results also reveal that inflation impedes income inequality for Bangladesh and India.  GDP growth rate is insignificant for India and Pakistan however it is significant for Bangladesh having statistically positive relationship with income inequality. It means that GDP growth rate is linked with growth of income of elite class rather than bottom segments of population. National income improves inequality for Bangladesh but have insignificant affect on income inequality for India and Pakistan. Similarly, trade openness is insignificant for India and Pakistan, however it is significant for Bangladesh having statistically positive relationship with income inequality, which indicates that there is increasing unemployment in these countries due to lesser employment opportunities for skilled and unskilled labour. Empirical results of human capital shows insignificancy for India and Pakistan where as it is significant for Bangladesh; hence revealing that these countries failed to optimally utilize their resources in educational sector.


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How to Cite

Abdul Qayyum Khan, Muhammad Haroon Hafeez, Naima Saleem, & Muhammad Azam. (2020). Exploring the Impact of Financial Development on Inequality: Evidence from Three Asian Countries. Review of Economics and Development Studies, 4(2), 341-355. https://doi.org/10.26710/reads.v4i2.419