Title: | The Impact of Financial Institution Development on Income Inequality: The Case of Ethiopia |
Authors: | Kassie, Gebeyaw |
Keywords: | Financial institution, income inequality, openness, credit, broad money, Gini coefficient |
Issue Date: | Jul-2015 |
Publisher: | ST. MARY'S UNIVERSITY |
Abstract: | The study investigates the link between financial institution
development and income inequality in Ethiopia. Econometrics frame
work (analysis) was employed as a general method of analysis using
secondary data collected from national bank of Ethiopia (NBE),
central statistical authority (CSA), MOFED and EEA. The study
covers for 33 years from 1980 to 2012. The Engle Granger two
steps procedure is followed to estimate the long run and short run
parameter for the variables included in the model.
The empirical result of the study shows that broad money to GDP
ratio, GDP, credit and openness are the main determinates of income
distribution (inequality) in Ethiopia in the long run. In the short run
only broad money to GDP ratio is the main determinant of income
inequality. All these variables except openness and broad money have
decreasing effect on income inequality.
The policy implication of the result implies that among other things
government should motivate more for domestic trade than
international trade. It should be selective in export and import trade.
Government should create awareness for the mass rural population
about the importance of formal financial institutions. Distribution
and expansion of financial institutions from urban to rural areas,
Provide incentives, licensing and other important measure to improve
equitable distribution of national resources. |
URI: | http://hdl.handle.net/123456789/2499 |
Appears in Collections: | The 9th Student Research Forum
|
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