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Financial deepening on income inequality
Get PDFThere exists a vast empirical literature on Financial Sector Development (FSD) and the income inequality nexus; however, it lacks consensus. To study this, 24 studies with 87 regression estimates on financial institution depth and income inequality were collected. This paper used the most common method of economic meta-analysis, the Partial Correlation Coefficient (PCC), to answer the question: What is the magnitude and impact, if any, of financial institution depth on income inequality? In addition, a multivariate meta-regression model was used to find moderator variables that produced mixed results in the literature. The results show that the global average comovement of financial institution depth (domestic credit) on income inequality is very small but positive; suggesting that growth in domestic credit may widen income inequality. The positive correlation between domestic credit and income inequality highlights how financial institutions use household income and collateral as a signal when deciding on credit applications. Finally, the multivariate regression results suggest that the present heterogeneity within the literature stems from different methodologies and control variables included in the econometric models, and panel studies that mix countries with heterogeneous characteristics. These suggest that different components of FSD may impact income inequality differently
EXCHANGE RATE PASS-THROUGH TO CONSUMER PRICES FOR CLOTHING, AND PHARMACEUTICAL PRODUCTS IN SOUTH AFRICA
Get PDFIn this paper, I examine the underlying relationship between exchange rate and prices in South Africa, this phenomenon is termed the Exchange Rate Pass-Through (ERPT). Available empirical literature on aggregate level paints an informative and validating picture of the declining ERPT to consumer price index in South Africa. The literature is still insufficient as there are few studies on disaggregated data. Subsequently, the main objective of the study is to bridge this gap, by investigating ERPT to consumer prices of individual commodities of manufacturing sector namely; i. Clothing, and ii. Pharmaceutical products- for the period of 2010: M01 -2018: M06 in South Africa. Johansen Maximum cointegration and a vector error correction modelling methodology are employed in obtaining the purposes of the study. The obtained results reveal a low long-run pass-through to consumer prices of clothing accounted for 26 percent. While the long run pass through to CPI for pharmaceutical products was as high as 44 percent. The heterogeneous pass through results found among different individual component of the manufacturing sector is useful in formulating the consumer price index forecast, which is an essential role of central banks with inflation targeting framework
Effects of Financial Sector Development on Income Inequality
Get PDFThe four strands of literature on the effects of FSD on income inequality allude to conflicting theoretical predictions. The major limitation of the previous studies is that they use financial institution depth measures as a proxy of aggregated FSD indicators. Financial depth alone does not consider the complex dimensions of FSD, making it hard to conclude on FSD's effects on income inequality. As such, the grounds for further research lie in finding precise measures or rules of thumb for the impact of aggregated and alternative FSD indicators on inequality. The thesis novelty lies in the use of more recent data (from 2004- 2019) and a comparison of the estimated impacts of aggregated FSD, and alternative FSD indicators on both before and after-tax income inequality. Adding to this, fewer studies have investigated the overall impact of aggregated FSD inequality this is because the aggregated FSD index was only introduced in the year 2016- see Svirydzenka (2016).
The new scientific findings of the thesis are as follows: Firstly, the aggregated financial development (FD), aggregated financial institution development (FI), and aggregated financial market development (FM) indices reduced after-tax income inequality of the 120 countries. The FD and FI indices also reduce after-tax inequality of emerging markets economies (EME). On the other hand, the results from the full sample of 120 countries using before-tax income inequality as the dependent variable suggest that increases in FD, FI, and FM indices widen inequality. In terms of the subsample results, the FD index increased the before-tax inequality of advanced markets (AM) and simultaneously reduced the before-tax inequality of low-income countries (LIC).
Intuitively, the levels of FD index in LIC are far smaller than those of the AM group. As such, in advanced economies, increases in FD produce higher returns on capital, which disproportionally benefits individuals with high incomes. Secondly, since the FD index of advanced economies is already high further increases in FD can lead to increased market concentration, leading to higher executive earnings, which can widen the before-tax income inequality. The observed paradox on the effects of the FD index on the before and after-tax Gini was expected, as the after-tax Gini index represents the net basis of inequality. The narrowing effect of the FD index on after-tax inequality suggests that progressive taxation, social transfers, and public sector investment associated with the developed financial sector can narrow inequality.
Secondly, the thesis demonstrates that increased access to financial institutions narrowed both the before and after-tax income inequality in the full sample of 120 countries and the after-tax inequality of LIC and EM groups. In the nonlinear model, ATM per adult has a U-shaped relationship with the after-tax inequality of the LIC group. These results reflect the levels of maintenance of ATMs, especially near rural and less economically developed cities; thus, the number of ATMs per adult may be increasing, but the number of actual functioning ATMs may be less.
Access to the financial market (FMA index) also demonstrates a U-shaped effect on both before and after-tax Gini. This suggests that an increase in FMA reduces inequality up until a threshold, beyond which FMA increases inequality. Suggesting the effects of FMA are not muchly affected by tax policies. Moreover, the effects of FMA on inequality reflect how the well-off benefit from the stock market, compared to the other income groups. This reflects the use of financial products (stock) as collateral for borrowing while the individuals are not paying taxes on unsold stocks.
While financial sector depth narrows income inequality in the linear model, the nonlinear model reveals that the Too Much Finance hypothesis holds, as the results confirm a U-shaped relation with after-tax income inequality. In the linear models, financial institution depth significantly narrows after-tax inequality of advanced and emerging market economies.
Contrary to the GMM empirical findings on financial institution depth, the meta-summary analysis findings show that the global effect size of financial institution depth on income inequality is small and positive. The thesis also concludes that there is no evidence of publication bias on the topic of domestic credit and income inequality. The multivariate meta-regression results show strong evidence of high heterogeneity in past studies on financial institution deepening and income inequality. The findings suggest that the different signs and magnitude of financial sector depth coefficients reported in the literature come from different methodologies applied and panel studies mixing countries of different characteristics in past studies.
Finally, this thesis contributes to the literature by using new 2021 micro-level data and complementary methods (the c-tree and probit model) to analyse the marginal effects of individual characteristics in the decision to use formal or informal financial sector. The findings suggest that higher education level, income levels, and regular income increase the association of using the formal financial sector. Unlike the rest of the BRICS nations, in China, individuals in the poorest income group have a positive and significant probability of using both the formal and informal sectors for credit. This highlights the increased access to credit in China through microcredit programs
Determinants of using formal vs informal financial sector in BRICS group
Get PDFThe determinants of the usage of the formal versus the informal financial sector within the BRICS
countries are analysed. Regression tree and probit methods are applied to a subset of observations
from the 2021 Global Findex database. Results of these different methods are robust and complement each other. The main findings are: (a) Individuals with regular income has higher probability of using the formal financial sector; (b) There is a nonlinear relationship with age and
the financial sector channels, individual above 36 are less likely to use the informal channel but
are more likely to use the formal channel
Impacts of Overall Financial Development, Access and Depth on Income Inequality
Get PDFThere is dense literature on the relationship between financial sector development (FSD) and income inequality. However, most of these studies employ a depth measure of FSD. This study argues that different components of FSD have a heterogenous impact on income inequality. This
study first empirically tests the overall impact of FSD on income inequality. Thereafter, I investigate
both the linear and nonlinear impact of financial sector development dimensions (depth and access)
on income inequality. The study’s novelty lies in using financial access data such as ATM per adult
and financial access index and comparing their impact on income inequality versus the impact of
financial sector depth (growth in domestic credit) on inequality. Adding to this, fewer studies have
investigated the overall impact of FSD. To solve the endogenous problem, the study uses the system
General Method of Moments (GMM) on the panel data of 120 countries, from 2004 to 2019. The
findings of the study are threefold. Firstly, the study finds that the overall FSD index, individual
financial institutions, and market development index all narrow income inequality. Secondly, this
study finds that different dimensions of FSD have heterogenous impacts on income inequality, where
increased access to financial services reduces income inequality in both linear and nonlinear models.
While financial sector depth narrows income inequality in the linear model, the nonlinear model reveals that the Too Much Finance hypothesis holds, as the results confirm a U-shaped relation with income inequality. These results are important for policy decisions concerning financial reforms and income distribution. These results imply that financial sector reforms can be shaped to reduce income inequality by increasing access to credit and through credit policy provisions
Going Beyond Counting First Authors in Author Co-citation Analysis
Get PDFThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
Variations on the Author
Get PDF“Variations on the Author” discusses two of Eduardo Coutinho’s recent films (Um Dia na Vida, from 2010, and Últimas Conversas, posthumously released in 2015) and their contribution to the general question of documentary authorship. The director’s filmography is characterized by a consistent yet self-effacing form of authorial self-inscription: Coutinho often features as an interviewer that rather than express opinions propels discourses; an interviewer that is good at listening. This mode of self-inscription characterizes him as an author who is not expressive but who is nonetheless markedly present on the screen. In Um Dia na Vida, however, Coutinho is completely absent form the image, while Últimas Conversas, on the contrary, includes a confessional prologue that moves the director from the margins to the center of his films. This article examines the ways in which these works stand out in the filmography of a director who offers new insights into the notion of cinematic authorship
Appropriate Similarity Measures for Author Cocitation Analysis
Get PDFWe provide a number of new insights into the methodological discussion about author cocitation analysis. We first argue that the use of the Pearson correlation for measuring the similarity between authors’ cocitation profiles is not very satisfactory. We then discuss what kind of similarity measures may be used as an alternative to the Pearson correlation. We consider three similarity measures in particular. One is the well-known cosine. The other two similarity measures have not been used before in the bibliometric literature. Finally, we show by means of an example that our findings have a high practical relevance.information science;Pearson correlation;cosine;similarity measure;author cocitation analysis
Dispelling the Myths Behind First-author Citation Counts
Get PDFWe conducted a full-scale evaluative citation analysis study of scholars in the XML research field to explore just how different from each other author rankings resulting from different citation counting methods actually are, and to demonstrate the capability of emerging data and tools on the Web in supporting more realistic citation counting methods. Our results contest some common arguments for the continued
use of first-author citation counts in the evaluation of scholars, such as high correlations between author rankings by first-author citation counts and other citation
counting methods, and high costs of using more realistic citation counting methods that are not well-supported by the ISI databases. It is argued that increasingly available digital full text research papers make it possible for citation analysis studies to go beyond what the ISI databases have directly supported and to employ more
sophisticated methods
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