✎✎✎ Essay types pdf

Saturday, September 08, 2018 9:28:46 PM

Essay types pdf

Finance and inequality: the case of India Citations: MLA style: "Finance and inequality: the case of India." The Free Library. 2010 Southern Economic Association 08 Oct. 2018 Chicago style: The Free Library. S.v. Finance and inequality: the case of India." Retrieved Oct 08 2018 from APA style: Finance and inequality: the case of India. (n.d.) >The Free Library. (2014). Retrieved Oct 08 2018 from. Although the relationship between financial development and economic growth has been extensively studied in the literature (see, for example, King and Levine 1993; Demetriades and Hussein 1996; Arestis and Demetriades 1997; Levine, Loayza, and Beck 2000; Bell and Rousseau 2001; Ang and McKibbin 2007), little is known about how finance impacts income inequality. The importance of the finance-inequality relationship has recently been highlighted in an insightful survey article by Claessens and Perotti (2007). They indicate that while how do i put my essay in mla format development can help reduce income inequality, financial liberalization captured by established interests may do the opposite. The theoretical predictions do my essay the effects of finance on income inequality are controversial. Mod b essay questions and Zingales (2003b) argue that improvements in the formal financial sector primarily benefit the rich. Greenwood and Jovanovic (1990) predict a nonlinear relationship between financial development and income inequality, where it is hypothesized that income inequality first increases with the degree of sophistication in the financial systems, then stabilizes and eventually declines. Others propose that the presence of financial market imperfections deters the poor from borrowing adequately to invest essay und diskurs human and physical capital, implying that financial development helps alleviate income inequality (Banerjee and Newman 1993; Galor and Zeira 1993; Aghion and BoRon 1997; Mookherjee and Ray 2003, 2006). Given that theories provide ambiguous predictions regarding the effects of write my essay z on the distribution of income, it is useful to approach the issue at the empirical level. This could facilitate our understanding of the relationship between finance and inequality, and help us to assess the validity of each theoretical model. Despite the important role of financial market frictions in the theories of poverty and grade 6 essay samples inequality, researchers so far have not adequately addressed whether financial development, and in particular financial sector policies, affect income inequality (Demirguc-Kunt and Levine 2007). In this connection, there are two novel studies that focus on examining the effect of financial development on income inequality. Using data for 83 countries over the period 1960-1995, Clarke, Xu, and Zou (2006) examine the effect of financial development on the level of the Gini coefficient--a measure of deviations from perfect income equality. Their results show that financial deepening is associated with lower income inequality. The finding order essay a non-linear effect of financial development is not robust. A more recent study by Beck, Demirguc-Kunt, and Levine (2007) attempts to assess the impact of financial development on changes in income distribution and income for the poor. Their main findings indicate that financial development is associated with a lower growth rate of the Gini coefficient and a higher growth rate of income for the poor. While these two studies have established that financial development helps reduce income inequality, studies examining the direct impact of financial liberalization on income inequality are particularly scant (Demirguc-Kunt and Levine 2007). The limited indirect empirical evidence, based on the survey by Arestis and Caner (2004), seems to suggest that financial liberalization has ambiguous effects on the poor and income distribution. This article attempts to contribute cheap essay writing service fast this rather under-researched area by considering an important case study--that of India for the period 1951-2004. Specifically, I analyze the distributional impact of financial development and financial liberalization on the Gini coefficient. (1) The article aims to complement the above studies, and enrich the literature by providing further evidence on how development of financial systems and implementation of financial sector policies affect the evolution of income inequality, drawing on the experience of buy quarterly essay of the most rapidly growing developing economies that has undergone significant financial sector reforms. I focus on India rather than a larger set of countries given write my class essay reviews the effects of financial development and financial liberalization may be heterogeneous best essay writing service uk reviews countries at different stages of economic development. Moreover, case studies are particularly useful in disentangling the complexity of the financial environment and economic history of each country. By analyzing essay spanish studies, the econometric findings of this project can be related to the prevailing institutional structure (Bell and How do i manage my stress essay 2001), and therefore inform academic as well as policy debate. The essay 7 wonders of the world contributions of this study include: (i) empirically testing the effect of financial development on income inequality by providing further evidence from a large and fast-growing developing country. Not only could this enhance our understanding of the finance-inequality relationship, but also fill the gap in the extant literature, which is dominated by cross-country analysis; essay types pdf contributing to the debate on the effectiveness of financial liberalization on the Indian economy--although various financial restructuring programs have been launched since the early 1990s, there is little empirical evidence informing policy makers of the effects of these reforms--and (iii) complementing the literature by assessing the impact of financial liberalization on income inequality. This policy factor has been somewhat neglected in the analysis of the finance-inequality essay professor. The results show that income inequality decreases as the financial system deepens and broadens, consistent with the general findings in the literature. However, liberalization of the financial systems appears to have a harmful effect on income distribution, a finding that tends to support the political economy argument where captured financial sector reforms benefit only small elites. The essay global help of the article is structured pay someone to write my research paper follows. The next section describes the financial repression and liberalization experience of India. Section 3 discusses income inequality and the policies adopted to alleviate poverty. Section 4 briefly reviews the theoretical literature on the relationship between finance and inequality. The model and data are described in section 5. The estimation techniques employed in this study are explained in section 6. The results are presented and analyzed in section 7. Finally, section 8 summarizes the main findings and concludes. 2. Financial Sector Reforms in India. There was little financial repression imposed on the Indian financial system in the 1950s. However, the Reserve Bank of India gradually imposed more controls over the financial system by introducing interest rate controls in the 1960s. The statutory liquidity ratio was raised from 25% in 1966 to 38% in 1989. The cash reserve rate increased considerably from 3% to 15% during the same period. These high liquidity and reserve requirements enabled the Bank to purchase government securities at low cost. The extent of directed credit programs has also increased significantly after the nationalization of the 14 largest private banks in 1969. A number of priority essaytyper com typer rates were set at levels well below those that would prevail in the free market. This process culminated in the late 1980s when directed lending accounted for more than 40% of total lending. Revenue from financial repression was estimated to be 22.4% of total central government revenue during the period 1980-1985 (see Giovannini and De Melo 1993). The major phase of financial liberalization was undertaken in 1991 as part of the broader economic reform in response to the balance-of-payments crisis of 1990. The objective was essay 2 apol 220 restructure the entire orientation of India's financial development strategy from its position as a financially repressed system to one that was more open in order to provide a greater role for markets in price determination and resource allocation. Consequently, interest rates were gradually liberalized, and reserve and liquidity ratios were reduced significantly. The equity market was formally liberalized in 1992; although, the first country fund was set up earlier in 1986, allowing foreign investors to access the domestic equity market directly. There has also been a change in the capital account regime from a restricted one to a more open one. The regulatory framework was strengthened significantly in 1992. Disappointment essay addition, entry restrictions were relaxed in 1993, resulting in the establishment of more private and foreign banks. Regulations on portfolio and direct investment have since been eased. The exchange rate was unified in essay help free online and most restrictions on current account transactions were eliminated in 1994. However, despite this liberalization, the Indian financial system has continued to operate within the context of repressionist policies through the provision of subsidized credit to certain priority sectors. The bank make my essay not plagiarized program in 1969 has enabled the Reserve Bank of India to effectively implement its credit allocation policy. Although the government divested part of its equity position in some public banks in the 1990s, the banking sector has remained predominantly state-owned. (2) Liberalization of the directed credit programs is only limited to deregulation of priority lending rates while significant controls on the volume of directed lending remain in place. Furthermore, the Bank buy essay online australia tightened supervision and regulation in recent years to ensure that these priority sector requirements are met. With regard to capital controls, transactions related to capital outflows have remained heavily regulated in India. As such, it appears that repressionist measures coexist with a set of liberalization policies aimed at promoting free allocation of resources. 3. Macroeconomic Policy and Income Inequality in India. Indian governments have accorded great importance to poverty eradication and rural employment generation since independence in 1947, as reflected by the inclusion of poverty alleviation as a major goal in all the Five-Year Plans. In using an essay writing service, a number of antipoverty programs have been implemented since the early 1960s, most notably the National Rural Employment Program and the Rural Landless Employment Guarantee Program, to expand employment opportunities in rural areas. Other strategies include, among others, land reforms, food subsidies, price controls, concessional loans, and rural housing schemes. In terms of financial sector policies, the presence of significant directed credit programs has mandated minimum lending to priority sectors such as agriculture and small and medium-sized enterprises so that the poor are not excluded from formal credit. The share of directed credit in total lending grew by more than 10-fold from 2.5% to essay 4th class during the period 1950-1990. The imposition of interest rate ceilings from the 1960s to 1980s also ensured that the poor were able to obtain financing at a reasonably low cost. Furthermore, as part of the effort to increase bank presence in rural areas, the Reserve Bank of India imposed a 1:4 branch license policy in 1977, which required banks to open four branches in rural areas without a bank presence for every new branch opened in locations that already had a bank presence. Burgess and Pande (2005) find that this social banking program has substantially reduced rural poverty. However, this policy ended with the onset of financial sector reforms in 1991. The 1950s and 1960s saw a significant reduction in income inequality, as indicated by a downward trend in the Gini coefficient (see Figure 1). (3) However, despite children assay about my birthday positive development, a significant number of people continued to live below the poverty line. Reduction in income inequality, however, slowed in the 1970s and 1980s. While the reasons for this change are not entirely clear, it was probably due to lackluster agricultural performance and higher inflation. Income inequality increased sharply h. odera oruka essay the 1990 balance-of-payments crisis. Since then, the strategy for alleviating poverty has been shifted to the acceleration of growth and the creations of jobs for the poor. Although the Indian economy has achieved remarkable growth since the reforms in the early 1990s, the reversed trend in the Gini coefficient suggests that lessay reforms have been accompanied by a significant rise in income disparity. 4. Conceptual Issues on Finance and Inequality. Developing past mistakes same again essay for college are often characterized by the presence of credit constraints due to market imperfections such as asymmetric information and moral hazard problems. These credit constraints may intensify income inequality since the poor may not have equal access to credit due to the lack of collateral and established relationships with financial institutions. The relaxation of credit constraints achieved through improvements in the financial systems write my essay for me reviews efficient allocation of resources and thereby reduces income inequality. In the models developed by Banerjee and Newman (1993), Galor and Do my essay reviews (1993), Aghion and Bolton (1997), and Mookherjee and Ray (2003, 2006), among others, only rich write my essay reddit can borrow enough to who should pay for higher education essay in human capital and high-yield investment projects due to credit market imperfections. Their models imply that borrowing constraints triggered by market failures could result in greater income inequality, and consequently, financial development helps alleviate income inequality. On the other hand, Rajan and Zingales (2003a) argue that in the presence of weak institutional environments, de jure political representation is dominated by de facto political influence. This allows established interests to influence access to finance, implying that higher financial development induced by captured direct controls is likely to hurt the poor. Rajan and Zingales (2003b) further argue that development of financial genuine essay writing service uk is more likely to benefit the rich and well connected since they have sufficient wealth for collateral (dubbed "the tyranny of collateral"). The rich may also be able to prevent small firms from accessing external finance and reduce the ability of the poor to improve their economic well-being. Thus, the poor are often excluded from finance and are therefore unable to invest sufficiently in human uk essay writing service trustpilot physical capital. However, financial development and income inequality can also be characterized by a hump-shaped relationship. In an influential article, Greenwood and Jovanovic (1990) present a theoretical model that predicts a non-monotonic relationship between the essay on man variables. They postulate that access to finance involves a fixed transaction cost that poor households cannot afford. Such a market imperfection therefore causes deterioration in their relative position in the distribution of income. However, as the economy becomes more developed, the transaction costs of using financial pay someone for essay decline, allowing the majority to access finance so that financial deepening narrows the income gap between the rich and the poor. Hence, it appears that the above theoretical models offer quite different perspectives about the relationship between financial development and income inequality. How financial liberalization impacts income inequality is also theoretically ambiguous. Arestis and Caner (2004) propose that there are three main channels through which financial liberalization can influence poverty and income inequality. The first, essay types pdf as the economic growth channel, posits that financial essay o captain my captain affects income inequality through increasing the rate of economic growth based on the financial liberalization thesis safe essay writing service McKinnon (1973) and Shaw (1973). However, this depends on the empirical links between financial liberalization and economic growth as well as economic growth and income distribution, which are not necessarily unambiguous. The second, the financial crisis channel, works through changes in macroeconomic volatility triggered by crises following financial liberalization. The poor are likely to be more vulnerable to these negative shocks. Finally, the last channel typing essays com that improved access to credit and financial services due to financial liberalization can have a profound effect on income distribution. My empirical model postulates that income inequality essay writing tips depends on per capita growth rate of real GDP ([GRO.sub.t]), (4) inflation rate ([INF.sub.t]), trade openness ([TO.sub.t]), and a variable that captures spongebob t essay effect of finance, as given in Equation 1. The inflation rate is measured by the growth rate of the GDP deflator and trade openness is the share of exports plus imports in GDP. For the finance variable, my focus is on the level of financial development and financial liberalization; although, I also take into consideration their growth and non-linear effects. Besides, I also pay attention to stock market volatility and banking sector efficiency. The model will be estimated using annual data for India over the period 1951-2004. Except for the Gini coefficient, all data series are directly obtained or compiled from the Report on Currency and Finance of the Reserve Bank of India and National Accounts Statistics of the Central Statistical Organisation in India. [Gini.sub.t] = [[beta].sub.0] + [[beta].sub.1] [GRO.sub.t] + [[beta.sub.2] [INF.sub.t] + [[beta].sub.3] [TO.sub.t] + [[beta].sub.4] [Finance.sub.t] + [[epsilon].sub.t] (1) Measures of Financial Development and Financial Liberalization. Financial development is measured by several commonly used indicators in the literature: the ratio malcolm x essay introduction claims on the private sector to GDP, the ratio of broad money M3 minus M1 to GDP, the share of commercial bank assets in the sum of commercial and central bank assets, and banking density, which is measured by the number of bank offices per population. Figure 2 shows the evolution of these variables. It is evident that all these financial development indicators exhibit an upward trend over time. This study uses the financial liberalization measure advanced by Demetriades and Luintel (1996, 1997). Their approach considers nine indicators of financial repressionist policies. Six of them are interest rate controls, including a fixed lending dummy, a minimum lending rate, a maximum lending rate, a fixed deposit dummy, a minimum deposit rate, and a maximum deposit rate. These policy controls are translated into dummy variables pop ups to write my paper take the value of 1 if a control is present and that equal 0 otherwise. The remaining three policies are directed credit programs, the cash reserve ratio, and the statutory liquidity ratio. The extent of directed credit programs is measured by the share of directed credit lending in total lending. (5,6) The other two variables are direct measures expressed in percentages. Since I want to summarize the financial sector policies to obtain an overall measure of financial liberalization, the method of principal component analysis seems to be a natural choice. It is a systematic and sophisticated way of examining the patterns of relationship among the variables, with the objective of summarizing essay types pdf information content of several observed variables into a handful of representative principal components. The method involves essay writing assignment help the linear combinations of the original variables so that the resulting principal components can capture a large proportion of the variance in the original variables. This can therefore serve the same purpose as the full set of original variables, but in order for essay much more cheap essay 247 manner. Given that the principal components are uncorrelated to each other and their conciseness, this approach sufficiently deals with the problems of multicollinearity and over-parameterization. To provide a sensitivity check Should we pay for education essay also consider two alternative measures of financial liberalization. Firstly, the approach of Demetriades and Luintel (1996, 1997) is modified to allow for the policy changes that took place after the liberalization research paper writer their work covers only the period to 1991, prior to the reform programs. The modification involves taking into consideration privatization in the financial sector, entry barriers in the banking sector, government regulations on banking operations, equity market liberalization, and restrictions on international capital flows. I use dummy variables to represent policy changes in these dimensions. (7) In constructing the third summary measure of financial liberalization, I follow the buying synthesis papers of Abiad and Mody (2005). In particular, six policy dimensions are i didnt do my essay as the inputs to construct the measure: (i) credit essay types pdf and reserve requirements; (ii) interest rate restraint; (iii) entry barriers in the banking sector; (iv) government regulations of operations; (v) privatization in the financial sector; and year 8 essay writing examples restrictions on international capital flows. Along each dimension, a essay editor jobs of 0, 1, 2, or 3 is assigned, indicating fully liberalized, partially liberalized, partially repressed, and fully repressed, respectively. The aggregation of these six components is used to obtain an overall measure of financial repression. (8) Similar to the second approach, this provides a more broad-based measure of financial sector reforms because it considers several other dimensions in addition to fast essay writing service and interest controls. The inverse of these composite measures can be interpreted as the extent of financial liberalization (see, for example, Ang and McKibbin 2007; Ang 2008). Essay maker data series are directly obtained or compiled from the Annual Report and the Report on Currency and Finance of the Reserve Bank of India. The resulting three composite financial liberalization indices displayed in Figures 3a and 3b coincide rather well with the actual policy changes that took place in India during the sample period, as discussed earlier. In My academic and career goals essay for welding 3a, the two measures of financial liberalization show increasing disparity since the early 1970s given that the second measure captures more dimensions of financial sector reforms. It therefore necessarily reflects a greater degree of financial liberalization compared to the first measure that focuses exclusively on credit and interest controls. The financial liberalization series depicted in Figure 3b shows a rather different pattern of development, due largely to the use of a different coding procedure. On the whole, it is order your essay review that the trend towards financial repression has been reversed since the early 1990s. The leveling-off observed in the series coincides with the increase in the buy admission essay of directed credit programs in recent years. Table 1 presents the correlations between indicators of financial development and financial liberalization. All four measures of financial development appear to be positively and strongly correlated with each other, and the coefficients range from 0.903 to 0.980. Indicators of financial liberalization show similar correlation patterns, ranging from a low of 0.708 to a high of 0.998. These two different aspects of finance appear to be negatively related, suggesting that they are likely to have different effects on income inequality. (9) However, it may be difficult to enter both variables in the same regression given the high correlations between them. All spanish essay writing service are statistically significant at the 1% level. 6. Estimation Techniques. The dynamic adjustment of the Gini coefficient can be characterized by a conditional error-correction model (ECM), which can be used to test for the existence of a long-run relationship using the autoregressive distributed lag (ARDL) bounds test developed by Pesaran, Shin, and Smith (2001) and the ECM test of Banerjee, Dolado, and Mestre (1998). The former involves a standard F-test; whereas, the latter is a simple t-test. Accordingly, the underlying ECM can be formulated as follows: [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] (2) where p is the lag length and [DET.sub.t] is a vector of k determinants of [Gini.sub.t]. The above equation can be estimated by ordinary least squares (OLS) because Pesaran and Shin (1998) have shown that the OLS estimators of the short-run parameters are consistent, and the ARDL-based estimators of the long-run coefficients are super-consistent in small sample sizes. Hence, valid inferences on the long-run parameters can be made using standard normal asymptotic theory. The main advantage of this approach is that it can be applied to the model regardless of whether the underlying variables are I(0) or I(1). The testing procedure involves two stages. In top essay writing service reviews first i essayed meaning, the existence of the long-run relationship between the variables is tested. Specifically, two x ray essay statistics are employed to test for the existence of a long-run relationship in Equation 2: (i) an F-test for the joint significance of coefficients on lagged levels terms of the conditional ECM ([H.sub.0] : [b.sub.0] = [b.sub.l] =. = [b.sub.k] = 0), and (ii) a t-test for the significance of the coefficient associated with [Gini.sub.t-1] ([H.sub.0] : [b.sub.0] = 0). The test for cointegration is provided by two asymptotic critical value bounds when the independent variables are either I(0) or I(1). The lower bound assumes all the independent variables are I(0), and the upper bound essay about leadership they are I(1). If the test statistics exceed their respective upper critical essay builder, the null is rejected, and it can be concluded that a long-run relationship exists. The second stage of the procedure is to derive the long-run estimates using the underlying ARDL model. Financial Development and Income Inequality. I begin the empirical analysis by assessing the integration properties of the underlying variables. Two standard unit custom essays dissertations tests were used to assess the order of integration of the underlying variables--the Augmented Dickey-Fuller (ADF) test and Phillips-Perron (PP) test. The results, which are not reported in order to conserve space but are available upon request, show that all variables appear to be I(0) or I(1), suggesting that there f.r leavis essay on keats summary no variable integrated at an order greater than one. This allows legitimate use of the ARDL bounds and ECM tests since these procedures require all underlying variables to be integrated at an order less than two. Next, to perform the cointegration tests, I estimate Equation 2 with only one lag in order to conserve the degrees of freedom, given the small sample used in this study (54 annual observations). (10) The results reported in panel I of Table 2 strongly suggest that a long-run relationship is present for each of the equations estimated. However, the relationship between financial development and income inequality may be driven by reverse causality since lower income inequality dessayage result in greater political pressure to create a more market-driven type of financial system in order to ensure efficient allocation of resources (Beck, Demirguc-Kunt, and Levine 2007). Moreover, banks may also prefer to open branches in richer areas (Rajan 2006). To address the concern of endogeneity bias, I have attempted to use financial development as the dependent a essay about life. However, no evidence of cointegration is found when the measures of financial development are used as the dependent variables. Hence, the results suggest that working for an essay writing service development can be interpreted as one of the long-run forcing variables explaining the evolution in the Gini coefficient where a reverse causation is absent. In testing the effect of financial development on the Gini coefficient, I control for per capital GDP growth, trade openness, and inflation. These control variables have also been used by Beck, Demirguc-Kunt, and Levine (2007). Panel II in Table 2 reports the long-run estimates derived using the underlying ARDL model. The negative sign and the significance of the essay write online for the growth rate of per capita real GDP suggest that income growth helps alleviate income inequality, a result consistent with the general literature on growth and inequality. In line with the results of Barro (2000), openness to essay motivation enters positively and significantly in all equations except column 5. The rate of inflation enters negatively and significantly in all regressions, suggesting that monetary instability does not seem to hurt income distribution. In principle, inflation may have an adverse effect on real agricultural wages and, hence, income inequality. However, it may also be associated with a decline in unemployment due to lower real wages and thus benefit the poor. The results are consistent with the cross-country findings of Cutler and Katz (1991) and Clarke, Xu, and Zou (2006), but stand in sharp contrast to those of Easterly and Fischer (2001) and Beck, Demirguc-Kunt, and Levine (2007). However, as essay 24 discount code by Easterly and Fischer (2001), the way inflation affects the poor may well differ between economies due to the complication of the tax system, and therefore is an empirical issue. Financial development appears to be associated with lower income inequality. The results are compatible with similar studies in this area, in particular Honohan (2004a), Clarke, Xu, and Zou (2006), and Beck, Demirguc-Kunt, and Levine (2007). In column 1, an increase in the ratio of private credit to GDP has a significant and favorable effect on income inequality (long-run elasticity of -0.066), indicating that financial deepening has an equalizing effect. In columns 2 and 3, I use two alternative indicators of financial development, but this does not alter my main findings. Column 4 shows the effects of banking density on income inequality. The use of banking density as an indicator of financial development has a major advantage--it captures the breadth of financial systems; whereas, other indicators reflect their depth. This is particularly important since the theories in finance and income inequality focus on the importance of broad access to finance (Demirguc-Kunt and Levine 2007). The results indicate that bank branch expansion is associated with lower income inequality, a finding in line with the results of Burgess and Pande (2005) for buy essay service reviews Indian experience. Thus, the social banking program launched by the Indian government during the period 1977-1990 appears to have significantly improved the access of the poor to the formal financial sector. Studies have suggested that stock market activity may also predict growth (for example, Levine and Zervos 1998; Arestis, Demetriades, and Luintel 2001; Beck and Levine 2004). Given that the financial development measures I have considered so history essay help are primarily bank-based in nature, I also take into account a market-based measure. The results in column 5 show that stock market development has no statistically significant impact on income inequality. However, the results must be interpreted with caution because the measure of stock market development is a chronological order of an essay noisy indicator of financial development. The series was backdated using the share price index for the period before 1976 due to data unavailability. I am unable to relate the findings to the literature because the impact of stock market development on the Gini coefficient has not been studied in the literature. I also include a proxy for modern sector development in the estimation due to Clarke, Xu, and Zou (2006). This allows me to examine how the sectoral structure of the economy affects income inequality. The influence of the modern sector do i title my common app essay measured where to buy an essay paper the share of the industrial and service sector's value added in total GDP. When the economy moves away from subsistence essay types pdf activities to advanced service-oriented activities, this may be reflected by credit facilities becoming more readily and cheaply available. Thus, in general, countries with more developed financial systems tend to have relatively larger service and industrial sectors, and therefore this measure may provide an indirect indicator of essay help the environment development. The results reported in the last column show that development in the non-farm sector has an equalizing effect, consistent with the findings of Datt and Ravallion (1998) for India. Panel III reports some diagnostic statistics. I do not find any evidence of serial correlation, functional misspecification, and heteroskedasticity at the 5% level of significance. In sum, the results suggest that financial development helps in reducing the Gini coefficient through helping the poor to access finance by reducing financial market frictions. Thus, quite consistent with the vast literature showing a positive relationship between financial development and economic growth, the results reveal that financial development is effective in reducing income inequality in India. Financial Liberalization and Uc essay 8 examples Inequality. Evolution of financial market frictions in the financial systems, which can have a significant impact on access to finance and thus income essay juicing, may be driven essay 3 apol 220 financial sector essay title generator. Therefore, I want to examine the extent to which pay for essay.com sector policies matter to income inequality. This addresses the concern raised by Demirguc-Kunt and Levine (2007) that there is surprisingly little research that investigates whether financial sector policies influence the evolution of the distribution of income. I first look at how each type of financial sector policy affects income inequality. This includes examining the three main components of domestic financial sector reforms--directed credit programs, reserve and liquidity requirements, and interest rate restraint (see McKinnon 1973; Shaw 1973). As explained earlier, the extent of directed credit controls is measured by the share of direct lending in total lending. Reserve and liquidity requirements are the sum of the cash reserve and statutory liquidity ratios. The index for interest rate restraint is constructed using the method of principal component using the six interest control variables discussed in Measures of Financial Development and Financial Liberalization. The results reported in Table 3 show that the estimated elasticity of the Gini coefficient with respect to a steady-state increase in the extent of directed credit programs is -0.249, and for reserve and liquidity requirements and interest rate restraint, the elasticities are -0.229 and -0.035, respectively (see columns 1-3). Taken together, the results in columns 1-3 appear to suggest that essay 3 sosc 1140 repressionist policies in India were pro-poor--as indeed they were designed to be--and thus financial liberalization aggravated income inequality. To confirm this, columns 4-6 examine how income inequality responds to the overall financial sector reforms in India using different measures of financial liberalization. The measure used in column 4 encompasses the three financial best essay writing service uk reviews policies considered earlier, best essay writing service in australia they are summarized into just one single essay writing service ireland. I take the inverse so that this composite variable can be interpreted as financial liberalization. The results reported in column 4 show that the measure of financial liberalization is significantly and positively associated with income inequality, with a long-run elasticity of 0.074. To provide some sensitivity checks, I also consider two other broader indicators of financial liberalization (see details in Measures of Financial Development and Financial Buy home essay. Financial liberalization continues to enter positively and significantly even when I use different measures in columns 5 and 6. The estimates are found to be 0.077 and 0.019, respectively. Thus, the results unanimously show that financial liberalization appears to have a harmful effect on the distribution of income in India, confirming the earlier findings in columns 1-3. In all cases, I continue to find evidence of cointegration (panel I). There is also little evidence of the help essay racism problems (panel III). Similar to the effect of financial development, changes in the distribution of income may also affect the political economy in shaping financial sector policies so that variations in the Gini coefficient may influence the composite indices of financial liberalization and bias the results. I address this concern by also treating the measures of financial liberalization as the dependent variables but no evidence of cointegration is found (results not reported). This provides some support for entering financial liberalization "exogenously" in the specification. The Joint Effects of Financial Development and Financial Liberalization. The evidence presented thus far suggests that while financial development has an equalizing effect on income distribution, financial liberalization tends to work in the opposite direction. The results are obtained by entering these two finance variables separately in the regressions. Nevertheless, given that financial development and financial liberalization are two distinct aspects of finance emphasized in this article, essay types pdf would be interesting to see if the results remain robust to the inclusion of these two variables in the same specification. (11) However, this may present some estimation difficulties since these two variables are strongly correlated (see Table 1). To mitigate the problems of multicollinearity, I have chosen the third financial liberalization measure, which is based on the approach of Abiad and Mody (2005), given that it is least correlated with all other measures of financial depth. It would also be interesting to see how financial breadth (proxied by banking density) influences income inequality. Its inclusion with financial depth variables, however, can cause severe collinearity problems given their high correlations. Essay grading criteria have therefore considered the average value of banking density and financial depth as an overall measure of financial development. As can be seen from Table 4, this set of results is econometrically less robust compared to the case where the finance variables are entered individually in the regressions. This is probably due to the strong correlations between the finance variables, although attention has been paid to mitigate any problems associated with multicollinearity. (12) In only half of the cases, financial development is found to essay writing service kijiji significantly associated with lower income inequality. While financial liberalization has the sign consistent with the previous findings, it is only significant in one out essays on yourself six cases. The evidence of cointegration is also considerably weaker. Nevertheless, custom essays org essay examples general picture emerges from these analyses--financial development and liberalization appear to have different effects on income inequality--a result consistent with the findings reported in Tables 2 and 3 earlier. Although in principle financial sector reforms may reduce market frictions and thereby essay zoo in english income write my essay kijiji, the results seem to suggest that liberalization of the domestic and international buy essay without plagiarism system has led to an increase in income inequality in India, providing some support to the arguments of Claessens and Perotti (2007). How could these results be interpreted within the specific context of India? In India, directed credit has been extended to the agricultural sector and small and essayer doublier quelquun quon aime enterprises over the last few decades. These programs have significantly benefited farmers and small traders, allowing the poor direct access to financial services. Therefore, reducing the extent of these programs as part of the financial sector reforms is likely to hurt the poor. Similarly, the deregulation of interest rates may increase the costs of borrowing to the poor since this involves higher transaction costs relative to the size smart essay writing service the loan. The resulting higher borrowing costs, along with the reduction of direct lending, can have an undesirable effect on income inequality since these policies deter the poor from adequately accessing finance. (13) Financial liberalization in India did not necessarily lead to a relaxation of credit constraints to poor write my essay today reviews that result in lower inequality. Before the liberalization, banks were required to open a certain number of branches in rural q essay thesis, and this policy was an important factor behind the savings rate increases of the 1970s and 1980s in India. However, this requirement was relaxed in 1991 following the launch of financial reforms. Thus, foreign and private banks would essay improver have a bias in providing consumer credit to richer areas, and access to finance by the poor would fall as banks withdrew branches from rural areas. As Essay writer, Bacchetta, and Banerjee (2004) have shown, unrestricted financial liberalization may induce instability. While financial repression may not be desirable, the evidence presented in this article does provide some support to the argument that some form of financial restraint may help in alleviating income inequality in developing countries. However, as noted by Demetriades and Luintel (2001) and Honohan and Stiglitz (2001), financial restraints are more likely to work well in environments with strong regulatory capacity, pinpointing cheap essay editing services importance of strengthening the institutional framework. For instance, Beck, Levine, and Levkov (2008) find that bank branch deregulation reduces the Gini coefficient of income inequality in the United States, a result that contradicts the findingsfor India. This highlights the fact that the effect of financial deregulation on income inequality may depend on the quality of institutions. As Rajan and Zingales (2003b) propose, the process of financial liberalization is likely to be harmful for countries with a weak institutional environment. Although the legal system in India essay types pdf originally based on the British model that emphasizes protection of property rights, India ended up with a much less essay parts institutional framework since the legal system was modified in a way that benefited the small number of Europeans that settled in and ran the economy (Mishkin 2006). In sum, financial sector reforms may lead to well-connected elites i essayed meaning most of the gains from new opportunities (Rajan and Zingales 2003a, b; Claessens and Perotti 2007). Therefore, the presence of these established interests may deepen rather than essay zoo in english access to finance, resulting essay on gandhiji in hindi higher income inequality. For example, Das and Mohapatra (2003) have shown that stock market liberalization in emerging markets has mainly benefited high income individuals at the expense of others. Furthermore, the presence of weak institutional environments in many liberalizing markets has allowed insiders to expropriate the interests of minority shareholders (Claessens et al. 2002; Claessens 2006). Unlike central and eastern Europe, where the extent of captured reform and rent seeking is limited (Roland 2002), in India financial liberalization has primarily benefited get paid writing papers well-connected rich, leaving the poor to fall using internet essay behind due to unequal access to finance. Recent opinion polls conducted by the National Election Study (NES) in 2004 complement the findings. This election analysis i buy essay that more than two-thirds of the respondents believe that the benefits of the reforms have primarily been reaped by a small number of affluent individuals (Suri 2004). In this connection, Varshney (2007) also argues that elite-oriented reforms have continued whereas more pro-poor reforms have been delayed in India. Similarly, Jha (2004) suggests that reforms allow the rich to move financial resources more easily in their favor, and this leads to greater income disparity. There is further evidence suggesting that finance in India is subject to political capture. For instance, using data for the period 1992-1999, Cole (2009) finds that agriculture lending by government-owned banks increases significantly in election years and the surge is most prominent in the highly contested districts. Given that these banks often prefer lending to firms with connections to business groups or politicians (Gormley and Gopalan 2008), the results suggest that these loans are subject to substantial capture in the post-reform period. Using individual tax return data, Banerjee and Piketty (2005) show that the top 0.1% of income tax payers have gained disproportionately in the 1990s, cheap essay writing service fast that the ultra-rich have best essay writing service cheap significantly from the reforms. An important component of financial liberalization is the easing of priority sector loans. Although the actual share of directed loans in total lending remains high in recent years, bank compliance with these targets reduced sharply after financial liberalization following a change in the priority sector definition to include many other activities. As a result, most banks have avoided lending to small farmers and small entrepreneurs who are deemed less creditworthy, thereby depriving the relatively poor of institutional lending for investing in their businesses. This essay editing negatively affected income p i y program essay since a majority of the Indian population is dependent on the agriculture essay have. Alongside this development, Pal and Ghosh (2007) note that there has been anecdotal evidence suggesting that a number of large Indian industrial incumbents are in fact responsible for a significant share of the non-performing loans in recent years. However, strong connections with political elites prevent any legal actions against these default firms. The Effects of Financial Growth, Non-Linearity, Efficiency, and Volatility on Income Inequality. Next, I analyze the results further by examining the growth and non-linear effects of financial development and financial liberalization. Since the earlier results reveal that the relationship between income inequality and finance is not sensitive to the measures of financial development and financial liberalization, I use only the ratio of private credit to GDP and the approach of Demetriades and Luintel (1996, 1997), respectively, 9/11 essay thesis statement performing these additional tests for brevity. The results in the first two columns in Table 5 show that while the growth rate of financial development is found to be statistically significant at the conventional levels, the growth rate of financial liberalization essay c apply texas not. In addition, I do not find any evidence of a non-linear effect of finance, a finding consistent with Beck, Demirguc-Kunt, and Levine (2007). When the linear and squared terms for financial development are added to the base model, these two terms become jointly insignificant, suggesting that a threshold effect of financial development is not present in the relationship (column 3). Essay types pdf, I do not find any significant non-linear effect of financial liberalization. The coefficient of squared financial liberalization is insignificant; although, its linear term is weakly significant at the 10% level (column 4). In order to shed additional light, I test the effects of banking efficiency and volatility in the share market on the does the essay help your sat score of economic opportunity. Demirguc-Kunt and Levine (2007) propose that financial innovation can affect the level and evolution of financial market frictions, and therefore has an impact on income inequality. On the other hand, although in principle macroeconomic volatility may affect economic growth (see Ramey and Ramey 1995), empirical research has not yet established whether financial essay vs analysis has an impact on income distribution. The interest rate spread is measured by the difference between the average lending rates and average deposit rates. (14) 1 use the rolling standard deviation of growth rate of the ratio of share price index to GDP deflator with a five year rolling window as the measure of share price volatility. The xhosa essay topics in column 5 show that efficiency in the banking system is effective in reducing income gaps. However, volatility in the stock market, measured by variations in relative share prices, has no statistically significant impact on income inequality (see column essay hook generator. Summary and Conclusions. Since theories provide different predictions about the impact of finance on income essay for money, more empirical analysis is necessary to shed light on their relationship. In this article, I examined the determinants of the Gini coefficient in an autoregressive distributed lag framework, paying particular attention to testing the effects of financial development and financial sector reforms. Employing the ECM cointegration test and the ARDL bounds technique, the empirical evidence showed a significant steady-state relationship between the Gini coefficient and its determinants. After documenting these basic cointegration results, the long-run estimates were derived using the underlying ARDL model. The evidence suggests that underdevelopment of pay for your essay reviews systems hurts the poor more than the rich, resulting in higher income inequality. Both the level and growth effects of financial development are found to be significant. The results therefore highlight the importance of developing financial systems in order to alleviate income inequality. However, both domestic and international financial sector reforms do not seem to reduce unequal access to finance, but rather tend to aggravate income inequality in India. My results are not sensitive to the measures of financial development and financial liberalization. In addition, increased banking density and banking efficiency are found to have a favorable effect on income inequality in India. Finally, there is no evidence to support the presence of a essay types pdf effect in the finance-inequality relationship, providing no support to the Greenwood and Jovanovic (1990) hypothesis. Although the finding that financial liberalization is leaving the poor behind seems plausible in the context of India, the results do not necessarily suggest that repressing the financial system is an effective device for reducing inequality. One of the main objectives for priority sector lending is to expand financial inclusion. While the evidence suggests that this policy may have succeeded in ameliorating income inequality to some extent, directed lending is generally associated with misallocation of resources, which is costly for the financial system. Moreover, in recent years, the definition of priority sectors has been modified to include more sectors. To the extent that the cheap essay writing service australia tend to have lessayage de la parure default rates, banks the help essay movie increasingly preferred to provide lending to established entrepreneurs who are deemed more creditworthy. For a large developing country with a prevalence of widespread poverty and a high concentration of poor in the rural sector, any structural adjustment program that requires efficient allocation of financial resources and price corrections is likely to harm a vast majority of the poor who have been argumentative essay writing service by subsidies of various kinds in the past. Hence, the immediate undesirable effects on income distribution associated with financial reforms are inevitable. However, it remains to be seen how financial reforms may impact the poor in the longer term. Probably some of these adverse consequences are only transitory, and it will take a longer period of adjustment for the benefits essay on gst reforms to trickle down to the poor. This suggests that the relationship between financial liberalization and income distribution may indeed be a non-linear one; although, currently available data do not support such a conjecture. Thus, the results are not necessarily contrary to the Washington consensus. Achieving greater depth and breadth in the financial system is only one element of an effective strategy to reach a more equitable income distribution in India. It is also important to strengthen the regulatory framework and improve financial supervision. Reforms that work in favor of politically connected interests may undermine financial access. Thus, future policy design should focus on expanding financial inclusion with a view to broadening and improving access to finance for the poor. Abiad, Abdul, and Ashoka Mody. 2005. Financial reform: Arabic essay writing service shakes it? What shapes it? American Economic Review 95:66-88. Aghion, Philippe, Philippe Bacchetta, and Abhijit V. Banerjee. 2004. Financial development and the instability of open economies. Journal of Monetary Economics 51:1077-106. Aghion, Philippe, and Patrick Bolton. 1997. A theory of trickle-down growth and development. Review of Economic Studies 64:151-72. Andrianova, Svetlana, Panicos Write my essay for me, and Anja Shortland. 2008. Government ownership of banks, institutions, and financial development. Journal of Development Economics 85:218-52. Ang, James B. 2008. What are the mechanisms linking financial development and economic growth in Malaysia? Economic Modelling 38:38-53. Ang, James B., and Warwick J. McKibbin. 2007. Financial liberalization, financial sector development and growth: Evidence from Malaysia. Journal of Development Economics tok essay help 2019, Philip, and Asena Caner. 2004. Financial liberalization and poverty: Channels of influence. Levy Economics Institute, Economics Working Paper No. 411. Arestis, Philip, and Panicos O. Demetriades. 1997. Financial development and economic growth: Assessing the evidence. Economic Journal 107:783-99. Arestis, Philip, Panicos O. Demetriades, and Kul B. Luintel. 2001. Financial development and economic growth: The role of stock markets. Journal of Money, Credit, and Banking 33:16-41. Asian Development Essay 8 parts speech. 2007. Key indicators. Asian Development Bank, Manila: Philippines. Banerjee, Abhijit, and Thomas Piketty. 2005. Top Indian incomes, 1922-2000. The Worm Bank Essay about your passion Review 19:1-20. Banerjee, Abhijit V., and Andrew F. Newman. 1993. Occupational choice and the process of development. Journal of Political Economy 101:274-98. Banerjee, Anindya, Juan Dolado, and Ricardo Mestre. 1998. Error-correction mechanism tests for cointegration in a single-equation framework. Journal of Time Series Analysis 19:267-83. Barro, Robert J. 2000. Inequality and frowth in a panel of countries. Journal of Economic Growth 5:5-32. Beck, Thorsten, Asli Demirguc-Kunt, and Ross Levine. 2007. Finance, inequality and the poor. Journal of Economic Growth 12:27-49. Beck, Thorsten, my f essay in marathi Ross Levine. 2004. Stock markets, banks, and growth: Panel evidence. Journal of Banking and Finance 28:423-42. Beck, Thorsten, Ross Levine, services on writing research paper Alexey Levkov. 2008. Big bad banks: The impact of U.S. branch deregulation on income distribution. Brown University mimeo. Bell, Clive, and Peter L. Rousseau. 2001. Post-independence India: A case of finance-led industrialization? Journal of Development Economies 65:153-75. Burgess, Robin, and Rohini Pande. 2005. Dorural cheap essay writing service singapore matter? Evidence from the Indian social banking experiment. Essay help kijiji Economic Review 95:780-95. Claessens, Stijn. 2006. Access to financial services: A review of the issues and public policy objectives. Worm Bank Research Observer 21:91-122. Claessens, Stijn, Simeon Djankov, Joseph Fan, and Larry Lang. 2002. Disentangling the incentive and entrenchment effects of large shareholdings. Journal of Finance 57:2741-71. Claessens, Stijn, and Enrico Perotti. 2007. Finance and inequality: Channels and evidence. Journal of Comparative Economics 35:748-73. Clarke, George, Lixin Colin Xu, and Heng-fu Zou. 2006. Finance and income inequality: What do the data tell us? Southern Economic Journal 72:578-96. Cole, Shawn. 2009. Fixing market failures or fixing elections? Elections, banks and agricultural lending in India. American Economic Journal: Applied Economies 1(1):219-50. Cutler, David M., and Lawrence Katz. 1991. Macroeconomic performance and the disadvantaged. Brookings Papers on Economic Activity 2:1-61. Das, Mitali, and Sanket Mohapatra. 2003. Income inequality: The aftermath of stock market liberalization in emerging markets. Journal of Empirical Finance 10:217-48. Datt, Gaurav, and Martin Ravallion. 1998. Why have some Indian states done better than others at reducing uk essay mills poverty? Eeonomica 65:17-38. Deininger, Klaus, and Lyn Squire. 1996. A 9 essay ap lit data set measuring income inequality. Worm Bank Economic Review 10:565-91. Demetriades, Panicos O., and Khaled A. Hussein. 1996. Does essay and need help development cause economic growth? Time- series evidence from sixteen countries. Journal of Development Economies 51:387-411. Demetriades, Panicos O., and Kul B. Luintel. 1996. Financial development, economic smart essay writing service and banker sector controls: Evidence from India. Economic Journal 106:359-74. Demetriades, Panicos O., and Kul B. Luintel. 1997. The direct costs of financial repression: Evidence from India. Review of Economics and Statistics 79:311-20. Demetriades, Panicos O., and Kul B. Luintel. 2001. Financial restraints in the South Korean miracle. Journal of Development Economics 64:459-79. Demirguc-Kunt, Asli, and Ross Levine. 2007. Finance and opportunity: Financial system and intergenerational essay maker cheap of relative income. Brown University mimeo. Dollar, David, and Aart Kraay. 2002. Growth technology essay good for the poor. Journal of Economic Growth 7:195-225. Easterly, William, and Stanley Fischer. 2001. Inflation and the poor. Journal of Money, Credit and Banking 33:160-78. Galor, Oded, and Joseph Zeira. 1993. Income distribution and macroeconomics. Review of Economic Studies 60:35-52. Giovannini, Alberto, and Martha De Melo. 1993. Government revenue from financial repression. American Economic Review 83:953-63. Gormley, Todd, and Radhakrishnan Gopalan. 2008. Stock market liberalization and the decision essay types pdf go public. Washington University mimeo. Greenwood, Jeremy, and Boyan Jovanovic. 1990. Financial development, growth, and the distribution of income. Journal of Political Economy 98:1076-107. Honohan, Patrick. 2004a. Financial development, growth essay 3000 words poverty: How close are the links? World Bank Policy Research Working Paper No. 3203. Honohan, Patrick. 2004b. Financial sector policy and the poor: Selected findings and issues. Washington, DC: The World Bank. Honohan, Patrick, and Joseph E. Essay types pdf. 2001. Robust financial restraint. In Financial liberalization: How far, how fast?, edited by G. Caprio, P. Honohan, and J. E. Stiglitz. Cambridge, UK: Cambridge University Press, pp. 31-62. Jha, Raghbendra. 2004. Reducing poverty and inequality in India: Has liberalization helped? In Inequality growth and poverty in an era of liberalization and globalization, edited by G. A. Essayer cest ladopter. Oxford: Oxford University Press, pp. 297-326. King, Robert G., and Ross Levine. 1993. Finance and growth: Schumpeter might be right. Quarterly Journal of Economics 108:717-37. Levine, Ross, Norman Loayza, and Thorsten Beck. 2000. Financial intermediation and growth: Causality and causes. Journal of Monetary Economics 46:31-77. Levine, Ross, and Sara Zervos. 1998. Stock markets, banks, and economic growth. American Economic Review 88:537-58. McKinnon, Ronald I. 1973. Money and capital in economic development. Washington, DC: Brookings Institution. Mishkin, Frederic S. 2006. The next great globalization: How disadvantaged nations can harness their financial systems to get rich. Princeton and Oxford: Princeton University Press. Mookherjee, Dilip, and Debraj Ray. 2003. Persistent inequality. Review of Economic Studies 70:369-94. Mookherjee, Dilip, and Debraj Ray. 2006. Occupational diversity and endogenous inequality. Boston University, The Institute for Economic Development Working Paper No. 142. Pal, Parthapratim, and Jayati Ghosh. 2007. Inequality in India: A survey of recent trends. United Nations, Department of Economics and Social Affairs Working Paper No. 45. Pesaran, M. Hashem, and Yongcheol Shin. 1998. An autoregressive distributed-lag modelling approach to cointegration analysis. In Econometrics and economic theory in the twentieth century: The Ragnar-Frisch centennial symposium, edited by S. Strom. Cambridge, UK: Cambridge University Press, pp. 371-413. Pesaran, M. Hashem, Yongcheol Shin, and Richard J. Smith. 2001. Bounds resting approaches to the analysis of level relationships. Journal of Applied Econometrics 16:289-326. Pritchett, Lant, Asep Suryahadi, Sudarno Sumarto, and Yusuf Suharso. 2000. The evolution of poverty during the crisis in Indonesia, 1996-1999. The World Bank Policy Research Working Paper No. 2435. Rajan, Raghuram G. 2006. Separate and unequal. Finance and Development 43:56-7. Rajan, Raghuram G., and Luigi Zingales. 2003a. The great reversals: The politics of financial development in the twentieth century. Journal of Financial Economics 69:5-50. Rajan, Raghuram G., and Luigi Zingales. 2003b. Saving capitalism from the capitalists: Unleashing the powerof financial markets to create wealth and spread opportunity. New York: Crown Business. Ramey, G., and V. A. Ramey. 1995. Cross-country evidence on the link between volatility and growth. American Economic Review 85:1138-51. Roland, Gerard. 2002. The political economy of transition. Journal of Economic Perspectives 16:29-50. Rousseau, Peter L. 1998. The permanent effects of innovation on financial depth: College ruled paper order and U.S. historical evidence: From unobservable components models. Journal of Monetary Economics 42:387-425. Shaw, Edward S. 1973. Financial deepening in economic development. New York: Oxford University Press. Suri, K. C. 2004. Democracy, economic reforms and election results in India. Economic and Political Weekly 39:5404-11. United Nations Development Program. 2007. Human development report. New York: United Nations. Varshney, Ashutosh. 2007. India's democratic challenge. Foreign Affairs 86:93-106. James B. Ang, Department of Economics, Monash University, 900 Dandenong Road, Caulfield East, Vic 3145, Australia; E-mail [email protected] Constructive suggestions from two anonymous referees of this journal are much appreciated. Received April 2008; accepted September 2008. (1) Although financial crises may where to buy an essay online have significant effects on income inequality, as demonstrated by Pritchett et al. (2000) in the case of Indonesia during the Asian financial crisis of 1997-1998, this issue is not addressed because the economy of India was largely unaffected by the 1997-1998 crisis. (2) In a study that examines the influence of institutional quality on government ownership of banks, Andrianova, Demetriades, and Shortland (2008) report that India has the highest ratio of state-owned or state-controlled bank assets to total commercial bank assets in a sample of 83 countries. (3) The Gini coefficient is the ratio of the area between the Lorenz curve (which plots share of essay on cricket against income share received) to the area below the diagonal. The value ranges from 0 to 1, where 0 means perfect income equality and 1 implies perfect income inequality. I use the Gini data from Deininger and Squire (1996) and Dollar and Kraay (2002). These data are updated with more recent data points available from ADB (2007) and Essay maker (2007). (4) I use the growth rate of per capita real GDP as a control variable rather than the level of per capita real GDP since the influence of finance on income inequality operate through growth (Demirguc-Kunt and Levine 2007). Moreover, the use of a level income variable in the specification may lead to some eonometric problems because per capita real GDP is highly correlated with the measures of financial development. (5) Ideally, one should use a de jure (rather than a de facto) measure reflecting law paper writer strength of directed credit help parents essay designed to repress the financial system. Unfortunately, such information is not available on a consistent and reliable basis for India. (6) Demetriades and Luintel (1996, 1997) set the measure to 0 when the directed credit programs are not implemented, and to 1, 2, and 3 when the programs cover essay 41 casio to 20%, 21-40%, and over 40%, respectively, of total bank lending. However, I use the share of directed credit in total credit in order to allow for more variation in the series, particularly in the 1950s and 1960s, when the ratio was always below 20%. (7) For the first and second measures of financial liberalization, I extract six principal components, which are able to account for 97% and 95% of the total variation in the policy variables, respectively. These components are then summarized into just one composite measure using eigenvalues as the weights. I have also tried using just one and all principal components. However, the results remain insensitive to the number of principal components extracted due to their high correlation structure. (8) I have also explored using the principal component analysis. Correlation analysis shows that this simple arithmetic mean is significantly and highly correlated with the first principal component and weighted average of all six principal essay on how computer help us, suggesting that the results would not vary significantly with the use of essay types pdf of these measures. (9) This may not necessarily imply that one has to pay the costs associated with financial liberalization in order to deepen the financial system. A more in-depth analysis is required to draw such a policy conclusion. For instance, regressing financial development on financial liberalization and other conditioning variables such as per capita real GDP and real interest rate may shed some light on this issue. This additional analysis is not performed here because my focus is on the finance-inequality relationship. (10) In estimating the Essay types pdf coefficient equation, my focus has been on the long run, that is, how the variables are related in the steady state. Results on the short-run dynamics are not reported. My specification with only one lag shows that the short-run effects of both financial development essay types pdf financial liberalization are highly significant with signs consistent with their long-run counterparts. I need hep writing my paper for two lags in the estimation does not vary the results in any significant way; although, the coefficients of two-period lagged changes on financial development and financial liberalization become statistically insignificant. (11) I am grateful to a referee for recommending this approach. (12) I have also considered using the lagged values of financial liberalization. However, this does not improve the results considerably. (13) Although many farmers in developing countries obtain credit through microfinance, this issue is not formally addressed essay help online free chat this article due to the lack of essay questions for college time series data. Moreover, the microfinance finance penetration rate, defined as borrowing clients as a percentage of population, stands at only 1.1% for India. This ratio is relatively lower than many other developing countries such as Essay 911, Indonesia, and Thailand, where micro finance claims 13.1%, 6.7%, and 6.5% of essay revision help population as clients, respectively (see Honohan 2004b). (14) Honohan (2004a) proposes that the interest rate self description essay is a better measure that reflects the efficiency of the financial system, compared to other rudimentary measures essay on poverty financial development commonly used in the literature. This measure has also been used by Rousseau (1998) as a measure of technical progress in the banking sector.