Abstract
The objective of this study is to examine the relationship between commercial bank branches availability and income inequality. Further the study also assesses the interaction effect of corruption and commercial bank availability on income inequality. The present study uses panel data estimation methods for analysing the above relationship for SAARC countries (Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan and Sri Lanka). The analysis suggests that a positive relationship exists between income inequality and financial availability in the initial stages. However, as the financial institutions reach a level of maturity and more people are integrated in the financial network, the level of income inequality starts reducing. Moreover, increase in financial availability helps in reducing income inequality when it is supported by less corrupt institutions. Policymakers should focus on reducing the level of corruption so as to enhance the effectiveness of the penetration of commercial bank branches.
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