Abstract
We examine the relationship between financial development and income inequality in India over the period 1952-2011 using the cointegration techniques of VARX and ARDL. In addressing India?s ?finance-inequality? nexus, we are concerned with finance?s size and efficiency and their linear- and nonlinear effects on income distribution respectively. To consider the influence of India?s exposure to globalization, financial crisis, trade and financial openness are taken into estimation. Our findings are: (i) both financial size and efficiency increase inequality; (ii) economic growth increases, whereas other variables increase inequality; and (iii) the nonlinear effect of financial development is not found.
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