Financial Inclusion and Income Inequality: Empirical Evidence from Transition Economies

Abstract

   Using data from 22 transition economies over the period of 2005 to 2015, this paper uses a two-stage least squares model and two different financial inclusion index to investigate the impact of financial inclusion on income inequality. We find that there is a negative relationship between financial inclusion and income inequality in these transition economies. The paper also suggests some policy recommendations to reduce income inequality through developing financial inclusion.