Document Type : Research Paper

Authors

1 Department of Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran

2 Master of Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University, Tehran, Iran

Abstract

 
Income inequality has received much attention from economists and policymakers as one of the components of economic development. On the other hand, the difference between developed and developing economies can be checked in the efficiency of their financial systems. This study investigates the effect of financial development on income inequality in Iran using the threshold regression method during 2020-1967. The results show that the effect of financial development of the banking sector and the stock market on income inequality has a threshold limit. in model one, the financial development of the banking sector before and after the threshold has a significant and negative effect on inequality. In model two, stock market financial development has significant and negative effect on income inequality before the threshold but not significant effect after the threshold.  However, there is insufficient evidence to support the effect of financial development on income inequality in the form of Greenwood and Jovanovic's inverse U hypothesis.

Keywords

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