Relationship Between Financial Inclusion and Income Inequality

Abstract

In this study, the effect of financial inclusion on income inequality was investigated for 13 countries from 2012 to 2019. First, financial inclusion indicators were divided into two categories, and a financial inclusion index was created by weighing each indicator. The effect of the created financial inclusion index on income distribution was investigated using the gradient boosting method, and the performance of this model was evaluated. According to the gradient boosting regression model findings, the financial inclusion index, GDP per capita, inflation, and corruption increase income inequality. When these variables are ranked in order of importance, the most powerful variable on income inequality is GDP per capita, followed by the financial inclusion index.