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Special Issue on Financial Inclusion, Financial Stability and Income Inequality; Guest Editors: Naoyuki Yoshino, Asian Development Bank Institute and Peter Morgan, Asian Development BankFree Access


    In this paper, we assess empirically whether financial inclusion contributes to reducing income inequality when controlling for other key factors, such as economic development and fiscal policy. We conclude that financial inclusion contributes to reducing income inequality to a significant degree, while the size of the financial sector does not. Although our results are still preliminary and constrained by data limitations, they still bear significant policy implications. More specifically, fostering financial inclusion has one more important by-product, which had hardly been analyzed yet, namely reducing income inequality. More specifically, given the broad definition of financial inclusion used in our analysis, promoting financial inclusion implies facilitating the use of credit to low-income households, as well as granting credit to small and medium-sized enterprises.

    JEL: D63, F63, F65, G21, H23, O15


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