Financial structure economic growth and income inequality

Abstract

In this thesis, we aim to examine the linkage between financial structure and income inequality via newlineeconomic growth. This exercise not only considers conventional financial structure classification like newlinebank or market based but it also considers the trajectory of the evolution of the financial structure where newlinea financial system moves from a low level of bank and market-based development to a higher level. To newlinemap the transition of financial systems from a low level of development to a highly developed financial newlinesystem, we employ the theoretically competitive concept of design of experiments. This strategy enables newlineus to map the trajectory of the evolution of financial structure across countries. Against these backdrops, newlinewe examine the question Do countries where financial development has been first bank-based, and then newlinemarket-based perform better than countries where financial development happens in first market-based newlineand then bank-based in terms of (1) Economic Growth and (2) Inequality? newlineIn light of the above discussion, We determine the financial structure in the first place. Keeping in view newlinethe anomalies in classifying an economy into a specific financial system (bank-based or market-based), newlinewe follow a new approach of classifying the financial system into a specific financial structure. The newlineliterature seems to classify an economy into either bank-based or market-based using certain bank and newlinemarket-related indicators. However, in this thesis, an attempt is made to categorize a particular economy newlineinto a finer level of financial structure. Then we try to map the evolution of the financial system along newlinethe trajectory of evolution. In evolution, either the bank or the market is dominant or both move newlinetogether. Thus recoding of financial structure and mapping its evolution becomes a chapter work for this newlinethesis. This thesis work primarily comprises three chapters. The first chapter covers the recoding of the newlinefinancial structure. The second chapter examines the linkages between the specific trajectory of the