Kappel, V (2009) explored the impact of financial liberalization on poverty and income inequality by using panel and cross country data of developed and developing countries. By applying OLS and 2SLS significant negative relationship is found between financial development and income inequality. In developed countries weak evidence was found for financial development to decrease income inequality whereas in developing countries financial liberalization was found to increase income inequality. Pradhan (2010) examines the causal relationship among economic growth, financial development and poverty reduction in India during the period of 1951 to 2008. The empirical analysis deploys cointegration and dynamic Granger’s causality. Long run equilibrium relationship is found to be present among financial development, economic growth and poverty reduction .The Granger’s causality test shows that there is unidirectional causality from poverty reduction to economic growth, economic growth to financial development, and financial development to poverty reduction and economic growth to poverty reduction. It also shows the presence of no causality between financial development and economic growth, and poverty reduction and financial development. The research study recommends that economic growth is of prime importance to stimulate financial development and both could play a pivotal role in reducing poverty. Jeanneney and Kpodar (2006) examine how financial development is useful in reducing by poverty on one hand by McKinnon conduit effect and on the other by promoting economic growth. The study is conducted on a panel of developing countries during the period of 1966 to 2000 first by employing OLS and then by Dynamic panel Generalized Met... ... middle of paper ... .... The bank of Albania (2009) inspects the causative association between financial development and economic growth for the Albanian economy using the Granger causality test for five different proxies for financial development. For the non-stationary and non-cointegrated series, the VAR model has been constructed and later, the above test has been applied. For non-stationary series but with a cointegrating relationship, the Granger-causality test has been applied after the construction of the vector error correction model (VECM). The empirical findings of the study show that there is a positive relation between all indicators measuring the financial development and economic growth in the long term. While in the short term, this relation is quite vague since different indicators provide different results. The data used in this paper belong to the period 1996-2007.
Income inequality has been and will forever continue to be a highly discussed topic in society. As a social experiment, income equality has historically failed. The adage from the communist era “from each according to his ability; to each according to his needs,” ran counter to human nature and experience. On balance, there are positive aspects to unequal income which include; its success in creating a more educated work force, competition among people to succeed and more stimulated productivity, which do not always, but tend to balance out any negative impacts such as; concentration of wealth, social consequences and outsourcing, that it may have.
To analyze income inequality to its full extent, it is important to compare and contrast the noticeable differences in the 20th century to now between domestic and international inequalities. The different paths that income inequality and corruption take reveal that income inequality is not a result of capitalist or socialist economic policies, but from corruption.The U.S. and most of Eastern Europe at the current moment are some of the most unequal income wise and corruption. They both took very different paths to becoming industrialized countries. As industrialism was on the rise in the late 1700s in Western Europe, so did the opportunity to make money through a new- fashioned way. No more medieval feudalism and being born into the power and riches-it was a time of opportunity. For the most industrialized nations of that time period, the quality and standard of living rose, for new efficient inventions were being made and education was becoming cheaper and socialized.
Recently, studies have shown that income inequality has many connections that have caused the gap in the United States. According to the research I found, income inequality is connected to corruption, trade, wages of workers, and education. The world income inequality had declined since the twentieth century according to the studies found (Clark). Corruption falls increasing on low income individuals more than higher income individuals. Additionally, the trade theory suggests that the free trade might have level up the income inequality higher within countries by the different patterns of wages and demand for workers who are skilled and unskilled (Silva and Leichenko). Moreover, the education of wealthier people has it easier because the learning efforts of education are unbalanced. Besides, income inequality in the United States is hurting our economy due to the all the issues of corruption, trade, wages, and education. Suggested by Robert H. Frank article called “Income Inequality: Too Big to Ignore,” the income inequality is bad for our economy (Frank).
America 's economy is dependent on the middle class. Slowly, the middle class is beginning to decrease. Soon enough there will be only the wealthy and the poor. Economic inequality is the gap between the upper class and the lower class. It is a problem that is growing everyday. Technology, education, race, gender, and globalization are the main causes of economic inequality. Each one of these causes contributes to the vicious cycle of economic inequality. The battle for our country 's financial wellbeing is upon us.
Houa, Han, and Su-Yin Cheng. "The roles of stock market in the finance-growth nexus: time series cointegration and causality evidence from Taiwan." Applied Financial Economics, 2010: 975–981.
U.S. financial markets assume a vital part in helping the wellbeing and productivity of the economy, businesses, and individuals. There is a solid relationship between the soundness of the economy and budgetary business improvement and monetary development, resulting in the slightest change in financial markets greatly affecting the economy, businesses, and individuals. Financial markets influences the increase in capital, removes the risk of subsidiaries, and liquidity in currency markets. When the monetary markets are doing admirably, "firm-level, industry-level, and cross country considers all propose that the level of money related advancement applies an expansive, positive effect on financial development." (MIT, 2001)
Berg, Andrew, and Jonathan Ostry. "Finance and Development." IMF. Equality and Efficiency, Sept. 2011. Web. 06 May 2014.
Prasad, Eswar S., et al. “Effects of Financial Globalization on Developing Countries: Some Empirical Evidence.” The National Bureau of Economic Research. National Bureau of Economic Research, 2003. Web. 10 Dec. 2013. .
There are at least four different research perspectives about the relationship between development and economic growth. Firstly, economic growth is the basis for social development. Secondly, economic growth and social development are not necessarily linked. Thirdly, both economic growth and social development are not basic causes by each other, but they depend on interaction. Fourthly, social development is the prerequisite for economic growth (Mazumdar. 1...
In the world today there is a lot of poverty. There is a great divide
In order for any country to survive in comparison to another developed country they must be able to grow and sustain a healthy and flourishing economy. This paper is designed to give a detailed insight of economic growth and the sectors that influence economic growth. Economic growth in a country is essential to the reduction of poverty, without such reduction; poverty would continue to increase therefore economic growth is inevitable. Through economic growth, it is also an aid in the reduction of the unemployment rate and it also helps to reduce the budget deficit of the government. Economic growth can also encourage better living standards for all it is citizens because with economic growth there are improvements in the public sectors, educational and healthcare facilities. Through economic growth social spending can also be increased without an increase of taxes.
“India was a latecomer to economic reforms, embarking on the process in earnest only in 1991, in the wake of an exceptionally severe balance of payments crisis”(Ahluwalia 2002).The idea being simple ,there was a need to ...
Machiraju, H. R. , 2002. International Financial Markets And India. 1st ed. New Delhi: New Age International.
Has anyone ever considered thinking about what the world is really going through? How many people don’t have the necessities in order to survive? If so, what are these people going through? Poverty is the state of one who lacks a standard or socially acceptable amount of money or material possessions. Sometimes events occur that changes a person’s perspective on life. Poverty is one that can have a huge effect on not only one person, but also the people around him/her. Over half of the world is going through this tragedy and we, being the ones who created it, have the responsibility to end it.
Banks sector is playing an important role in economies. The banking industry, as the classic and the most influential of financial intermediaries, facilitates economic operations. Financial sector in the worldwide country has been changes over these years by looking the changes of financial structure environment and economic conditions. Thus, banks are a very important point to financial system and play an important role as control and contribute growth to the economic sector.