Causality among Financial Liberalization, Poverty and Income Inequality

Kappel, V (2009) explored the impact of monetary liberalization on poverty and income inequality by victimization panel and cross uncouth data of developed and developing countries. By applying OLS and 2SLS significant negative birth is found among financial development and income inequality. In developed countries wanton 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 kinship among scotch increase, financial development and poverty reduction in India during the flow of 1951 to 2008. The empirical analysis deploys cointegration and dynamic Grangers causality. Long knead equilibrium congenatorship is found to be present among financial development, scotch growth and poverty reduction .The Grangers causality tribulation shows that there is unidirectional causality from poverty reduction to economic growth, economi c growth to financial development, and financial development to poverty reduction and economic growth to poverty reduction. It also shows the presence of no causality among financial development and economic growth, and poverty reduction and financial development. The search study recommends that economic growth is of prime importance to stimulate financial development and both could play a pivotal role in cut down poverty.Jeanneney and Kpodar (2006) examine how financial development is useful in reducing by poverty on one hand by McKinnon conduit feeling 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... ....The bank of Albania (2009) inspects the causative association between financial development and economic growth for the Albanian economy using the Granger causality taste for five different proxies for financial develo pment. For the non-stationary and non-cointegrated series, the var modelling 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 preferably vague since different indicators provide different results. The data used in this paper belong to the period 1996-2007.