TITLE:
Is There a Reverse U-Shaped Relation between Financial Development and Income Distribution? Comparison between Developed Countries and Transforming Countries
AUTHORS:
Zhaoying Liu, Qian Wang
KEYWORDS:
Financial Development, Income Distribution, Reverse U-Shaped Relation, Developed Countries, Transforming Countries
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.3 No.3,
March
25,
2015
ABSTRACT: Researching relation between financial development and income distribution is always a hotspot issue of theory. In 1990s, Greenwood and Jovanovic proposed the reverse U-shaped relation model between financial development and income distribution. Related scholars conducted empirical analysis accordingly but there was always no consistent conclusion. In this paper, whether there is a reverse U-shaped relation between financial development and income distribution is verified via different country types. USA, UK and Germany are taken as representatives of developed country; China, Russia and Brazil are transforming countries to respectively carry out empirical analysis to relation between financial development and income distribution, and it is found that: there is no reverse U-shaped relation between financial development and income distribution in developed countries, nevertheless there is an apparent reverse U-shaped relation in transforming countries.