Investigating the Relationship Between Financial Development and Income Inequality in Developed and Developing Countries: An Application of Canonical Correlation Analysis

Çiğdem Yılmaz Özsoy

Makale detayları

Investigating the Relationship Between Financial Development and Income Inequality in Developed and Developing Countries: An Application of Canonical Correlation Analysis

Yazarlar:

Çiğdem Yılmaz Özsoy

Yayıncı:

Istanbul University

Ana Başlıklar:

Ekonometri (Diğer)

Dergi:

EKOIST Journal of Econometrics and Statistics Issue 38, pp.35-52

Belge Tipi:

Makale

Yayın Tarihi:

7/2023

Belge Dili:

Türkçe

Document ID (Org No.):

2001296284

pISSN:

2651-396X

Anahtar kelimeler:

Özet:

 This paper investigates the relationship between the variables of financial development and income inequality using a canonical correlation analysis for 41 developed and developing countries in 2017. Financial develop consists of the four subdimensions of access to finance, efficiency, stability, and external liberalization, which are respectively explained by the number of ATMs per 100,000 adults, net interest margin, ratio of regulatory capital to risk-weighted assets, and ratio of consolidated foreign claims of BIS Bank for International Settlements Reporting Banks to GDP. Meanwhile, income inequality consists of the variables of Gini coefficient and poverty gap index. As a result of the canonical correlation analysis, a highly correlated relationship was found between financial development and income inequality, with the common variance shared among the data being 45. To test the reliability of this result, Mardias multivariate normal distribution test was applied, and the dataset of the variables was determined to not be normally distributed. Therefore, the study only considered structural correlations. As a result of the structural correlations, the Gini coefficients contributions to the income inequality dataset can be said to be more significant than what the poverty gap index contributes. Net interest margin explains the subdimension of financial efficiency, and its contribution was observed to be more important than the other proxy measurements that express access to the subdimensions of finance, stability, and external liberalization. Therefore, positive developments in the net interest margin will be able to positively affect financial development thus increasing the income of the poor and the use of economic opportunities, as well as narrowing income inequality in both developed and developing countries.

 This paper investigates the relationship between the variables of financial development and income inequality using a canonical correlation analysis for 41 developed and developing countries in 2017. Financial develop consists of the four subdimensions of access to finance, efficiency, stability, and external liberalization, which are respectively explained by the number of ATMs per 100,000 adults, net interest margin, ratio of regulatory capital to risk-weighted assets, and ratio of consolidated foreign claims of BIS Bank for International Settlements Reporting Banks to GDP. Meanwhile, income inequality consists of the variables of Gini coefficient and poverty gap index. As a result of the canonical correlation analysis, a highly correlated relationship was found between financial development and income inequality, with the common variance shared among the data being 45. To test the reliability of this result, Mardias multivariate normal distribution test was applied, and the dataset of the variables was determined to not be normally distributed. Therefore, the study only considered structural correlations. As a result of the structural correlations, the Gini coefficients contributions to the income inequality dataset can be said to be more significant than what the poverty gap index contributes. Net interest margin explains the subdimension of financial efficiency, and its contribution was observed to be more important than the other proxy measurements that express access to the subdimensions of finance, stability, and external liberalization. Therefore, positive developments in the net interest margin will be able to positively affect financial development thus increasing the income of the poor and the use of economic opportunities, as well as narrowing income inequality in both developed and developing countries.

 This paper investigates the relationship between the variables of financial development and income inequality using a canonical correlation analysis for 41 developed and developing countries in 2017. Financial develop consists of the four subdimensions of access to finance, efficiency, stability, and external liberalization, which are respectively explained by the number of ATMs per 100,000 adults, net interest margin, ratio of regulatory capital to risk-weighted assets, and ratio of consolidated foreign claims of BIS Bank for International Settlements Reporting Banks to GDP. Meanwhile, income inequality consists of the variables of Gini coefficient and poverty gap index. As a result of the canonical correlation analysis, a highly correlated relationship was found between financial development and income inequality, with the common variance shared among the data being 45. To test the reliability of this result, Mardias multivariate normal distribution test was applied, and the dataset of the variables was determined to not be normally distributed. Therefore, the study only considered structural correlations. As a result of the structural correlations, the Gini coefficients contributions to the income inequality dataset can be said to be more significant than what the poverty gap index contributes. Net interest margin explains the subdimension of financial efficiency, and its contribution was observed to be more important than the other proxy measurements that express access to the subdimensions of finance, stability, and external liberalization. Therefore, positive developments in the net interest margin will be able to positively affect financial development thus increasing the income of the poor and the use of economic opportunities, as well as narrowing income inequality in both developed and developing countries.

 Bu çalışmada, Finansal Gelişme ile Gelir Eşitsizliği arasındaki ilişki Kanonik Korelasyon Analizi kullanılarak araştırılmıştır. Gelişmiş ve gelişmekte olan 41 ülke için yapılan çalışmada Finansal Gelişme değişken seti finansal erişim, finansal verimlilik, finansal istikrar ve dışsal serbestleşmeden oluşan dört farklı boyut ile açıklanmıştır. Bu boyutlar ise sırasıyla 100.000 Kişi Başına Düşen ATM Sayısı, Net Faiz Marjı, Düzenleyici Sermayenin Risk Ağırlıklı Varlıklara Oranı ve BIS Raporlama Yapan Bankaların Konsolide Dış Alacaklarının GSYİHya Oranı değişkenleri ile tanımlanmıştır. Gelir Eşitsizliği değişken seti ise, Gini Katsayısı ve Yoksulluk Açığı Endeksi günde 3,20 ABD Doları değişkenlerinden oluşmuştur. 2017 yılı verileri kullanılarak yapılan Kanonik Korelasyon analizi sonucunda, Finansal Gelişme ve Gelir Eşitsizliği değişken setleri arasında yüksek düzeyde ilişki olduğu saptanmıştır. Bu sonucun güvenilirliğinin test edilmesi için Mardia Çok Değişkenli Normal Dağılım testi uygulanmış ve değişkenlere ait veri setinin normal dağılmadığı saptanmıştır. Bu nedenle çalışmada sadece yapısal korelasyonlar dikkate alınmıştır. Yapısal korelasyon sonucunda ise, Gini Katsayısının Gelir Eşitsizliği veri setine katkısının Yoksulluk Açığı Endeksinin katkısından daha önemli olduğu; ayrıca finansal etkinlik boyutunu temsil eden Net Faiz Marjının katkısının, finansal erişim, finansal istikrar ve dış serbestleşme boyutlarını ifade eden diğer değişkenlere göre Finansal Gelişime değişken seti için daha önemli olduğu sonucuna ulaşılmıştır. Elde edilen tüm bu sonuçlar birlikte değerlendirildiğinde, özellikle Net Faiz Marjı değişkeninde meydana gelecek olumlu gelişmelerin finansal gelişmeyi hızlandırarak yoksulların gelirlerini arttırabileceğini, ekonomik fırsatların daha fazla kullanılabileceğini ve gelir dağılımını sıkılaştırarak gelir eşitsizliğinin ortadan kaldırılmasına katkı sunabileceğini göstermiştir.

Makale detayları

Investigating the Relationship Between Financial Development and Income Inequality in Developed and Developing Countries: An Application of Canonical Correlation Analysis

Yazarlar:

Çiğdem Yılmaz Özsoy

Yayıncı:

Istanbul University

Ana Başlıklar:

Ekonometri (Diğer)

Dergi:

EKOIST Journal of Econometrics and Statistics Issue 38, pp.35-52

Belge Tipi:

Makale

Yayın Tarihi:

7/2023

Belge Dili:

Türkçe

Document ID (Org No.):

2001296284

pISSN:

2651-396X

Financial Development

Income Inequality

Canonical Correlation Analysis

Mardia’s TestFinansal Gelişme

Gelir Eşitsizliği

Kanonik Korelasyon Analizi

Mardia Test

Sayı

Makale detayları

Yazarlar: Çiğdem Yılmaz Özsoy

Yayıncı: Istanbul University

Ana Başlıklar: Ekonometri (Diğer)

Dergi: EKOIST Journal of Econometrics and Statistics Issue 38, pp.35-52

Belge Tipi: Makale

Yayın Tarihi: 7/2023

Belge Dili: Türkçe

Document ID (Org No.): 2001296284

pISSN: 2651-396X

Sayı

Yazarlar:

Çiğdem Yılmaz Özsoy

Yayıncı:

Istanbul University

Ana Başlıklar:

Ekonometri (Diğer)

Dergi:

EKOIST Journal of Econometrics and Statistics Issue 38, pp.35-52

Belge Tipi:

Makale

Yayın Tarihi:

7/2023

Belge Dili:

Türkçe

Document ID (Org No.):

2001296284

pISSN:

2651-396X