Efficiency Of Financial System Research Articles

Evaluating village financial governance in top tourism destinations

Village fund management is important for village economy and welfare. Village funds in Gresik Regency, Indonesia In particular, for the 2022 period, the revenue budget is IDR. 2,355,638,000 in Pangkahkulon village, while Rp. 9,865,701,000 for Sekapuk village, demonstrating the principles of accountability and transparency for effective and sustainable development. Accountability and transparency in village fund management ensure clear financial reporting, community participation, and openness of information, despite still facing obstacles such as lack of resources and regulations. Lack of community participation reduces accountability, transparency in achieving good financial governance in 3 villages in Gresik Regency. This study proposes to assess the impact of financial governance in Sekapuk, Pangkahkulon, and Sidokumpul Villages, focusing on accountability, transparency, and community participation. Despite progress, challenges including resource constraints and regulatory changes remain. This study provides in-depth insights into the effectiveness of village financial management systems, emphasizing the importance of community participation in improving accountability and transparency and building public trust. This study explores the implementation of good financial governance in three Gresik villages, focusing on accountability, transparency, and community participation. The study design uses a phenomenological approach to understand perceptions related to transparency and accountability in village fund management in Gresik Tourism Villages through interviews and observations. Primary data were collected from village officials, and analysis was conducted using NVivo 12 Plus, prioritizing transparency and community participation. This study found that accountability in Gresik Tourism Villages requires a transparent and efficient financial system. The SISKEUDES application experienced technical problems that affected reporting, so technical improvements and staff training were needed. Transparency and community participation in meetings and discussion forums are key to increasing trust and effectiveness in village fund management. Thus, in achieving Good Financial Governance in Gresik Tourism Villages, a financial system that is accountable, transparent, and involves community participation is needed. Information technology, regular training, and supervision with NGOs are important for efficiency and transparency, and discussion forums strengthen community trust.

Does Green Finance Affect Economic Performance? Growth and Crowding-Out Consequences

ABSTRACT Green finance is crucial to the achievement of China’s dual-carbon goals and its sustainable economic development. Based on the data from 2011 to 2020, This paper employs a double-difference method to examine two effects of green finance on economic growth, namely, its growth and crowding-out effect. The empirical results show that, in general, green finance improves the level of economic growth and doesn’t impede the entry of new enterprises, while crowding out the contribution of heavy polluting industries to the economy. Green financial policies effect economic performance mainly through resource allocation and technological innovation. Specially, in comparison to the central and western regions, green finance exerts a more pronounced influence in the eastern region, potentially attributable to disparities in regional development levels, financial system efficiency, and degrees of marketization. In addition, both growth and crowding-out effect are more significant in resource-dependent cities.

Economic policy uncertainty and financial system efficiency

Economic policy uncertainty (EPU) adversely affects financial system functioning with potentially critical repercussions for economies and corporations worldwide. Financial system efficiency (FSE) has a vital influence on fostering optimal economic growth and development; however, the impact of EPU on FSE remains under-explored. This study investigates the effect of EPU on FSE along with its components financial institution efficiency (FIE) and financial market efficiency (FME). Using data from 22 countries over a 20-year period (2002–2021), our analysis reveals a significant negative effect of EPU on FSE, FIE and FME. Notably, our split-sample analysis highlights the accentuated adverse effects of EPU in high-EPU regimes, emphasising the importance of vigilance during periods of elevated policy uncertainty. We conduct a series of sensitivity tests, including alternative measures of EPU, FSE, FIE and FME, and apply two-stage least squares and two-step dynamic system generalised method of moments estimators and introduce additional control variables. These tests consistently reaffirm the core conclusions of our study. Finally, we discuss the implications of our findings for policymakers.

Financial globalization and economic growth amid geopolitical risk: A study on China-Russia far East federal district

Geopolitics, natural resource efficiency and financial globalization have arisen as a new concept for low CO2 to achieve sustainable economic growth (EG). Therefore, developed and developing economies focus on Geopolitics risk (GPR), natural resource (NRS) efficiency and financial globalization (FG) to cope with CO2 neutrality targets. In order to understand the elements that contribute to achieving CO2 neutrality, this study sought to establish a relevant connection between geopolitics, the efficiency of NRS, financial globalization (FNG), and economic growth. For the abovementioned objectives, modern econometric methods, such as the canonical cointegration, CS-FGLS and GMM were adopted to evaluate the China-Russia Far East dataset between 1990 and 2022. In order to achieve CO2 neutrality in the long run, the study's elements are crucial, according to the results. In addition, GMM shows that each of the parameters affects CO2 neutrality. As a result, the ecological Kuznets curve rules the economic landscape, and long-term CO2 neutrality is greatly facilitated by geopolitics, efficient use of natural resources, financial globalization, and economic growth. Consequently, numerous domains necessitate far-reaching and revolutionary policy changes, such as economic integration to mitigate geopolitical risk, effective management of natural resources, efficient financial systems, and sustainable technology.

Blockchain based Banking System Using Ethereum

This paper proposes a novel blockchain-based advanced banking system that leverages the distributed ledger technology of Ethereum to create a secure, transparent, and efficient financial system. The system utilizes a permission blockchain network, where participants are pre-authorized to join and contribute to the network. This ensures the security and integrity of the system, while still allowing for a wider range of participants than a fully public blockchain network. The system works by first having a user initiate a transaction request. The system then verifies the user's identity and ensures the authenticity of the request. The transaction is entered into the blockchain ledger after it has been validated. This ensures that the transaction is immutable and transparent, as all participants in the network can view the transaction details. The system also includes a fraud detection mechanism that can detect any changes made to the transaction after it has been recorded on the blockchain. This helps to ensure the security of the system and protect users from fraudulent activity. The proposed system has the potential to revolutionize the banking industry by providing a more secure, transparent, and efficient way to conduct financial transactions. Keywords: blockchain, online banking, ethereum, ganache, hash, smart contract, blocks

The Role of Financial Development in Economic Growth using WPM Method

Financial development is possible investments creating information about and allocation of capital, monitoring of companies and corporate administration, commerce, diversification and risk management, accumulation and accumulation of savings, exchange of goods and services in activities like facilitation includes improvements. provided by financial institutions economic theory, at best and efficient financing institutions-banks, stock markets and bond markets-which capital it’s for high production applications paying is for economic growth beneficial. development of developing Asia strong to retain and efficient financial systems particularly important are because the performance of the investment as a driver of the region's development reduces the amount of investment. Since the early 1990s the region's financial systems are deep and diversified data indicate. 125 countries more formal econometrics on panel data quantitative analysis, financial development significant in development positive effect confirms having, especially in developing countries. of financial development in the development of the region impact than elsewhere significantly different thatno, for the asian financial crisis since then its influence has weakened the results also indicate that financial intermediaries, these teachers are bankers finance in the weakness of the sector effect of liberalization Is it a temporary effect will check that, that is, in the following years only this is observed. beginning of liberalization. this is not the case. of the banking sector weaknesses will only become apparent over time. however, in developing countries financial Liberalization Policy as an important part of the reform has Among some researchers, it is about virtues reflects overall confidence financial liberalization is that of the banking sector lead to weakness significant factor is, also of economics status even after controlling that there is this effect they found, the first one below income in the area earning funds summarize the implications the first one below review the area we do. income, cost and Savings, investment and wealth accumulation financial statements of we briefly reviewed do. The second division financial institutions orrole of intermediaries deals with The third section income, interest and money conventional theories about funding for real development between growth and development for important contacts enough attention that he did not pay some theoretical adaptations proposes and argues. The purpose of this paper is tofield-projectseveral in conjunction with the detain determinations and measurement perceived at a distance water using data for productivity mapping (WPM)methods and protocols is to create. Stock Market Investments, Real Estate Investments, Cryptocurrency Investments, Peer-to-Peer Lending and Startups and Venture Capital. Risk Management, Return on Investment (ROI), Portfolio Diversification and Costs and Fees. the Ranking of Financial development. Real Estate Investments is got the first rank whereas is the Cryptocurrency Investments the Lowest rank.

An advanced approach to operational quality evaluation for industry-finance integration enterprises based on integrated interval-valued intuitionistic fuzzy multi-attribute decision making

With the acceleration of economic globalization, enterprises are facing fierce competition and huge challenges, requiring deep financial management transformation. In this context, the integration of industry and finance has gradually demonstrated extremely important value. The integration of industry and finance can not only effectively improve the efficiency of financial management, prevent business risks, and improve operational efficiency, but also enhance the comprehensive ability of enterprise financial management, providing a more flexible, transparent, and efficient financial management system for enterprises. The operational quality evaluation of industry-finance integration enterprises under lean management accounting is a multiple-attribute decision-making (MADM). In this paper, some calculating laws on IVIFSs, Hamacher sum, Hamacher product are introduced, and the interval-valued intuitionistic fuzzy Hamacher interactive power averaging (IVIFHIPA) technique is proposed based on the interval-valued intuitionistic fuzzy (IVIF) Hamacher interactive weighted averaging (IVIFHIWA) technique and power average (PA) technique. Meanwhile, some ideal properties of IVIFHIPA technique are studied. Then, the IVIFHIPA technique is employed to cope with the MADM under IVIFSs. Finally, an example for operational quality evaluation of industry-finance integration enterprises under lean management accounting is employed to test the IVIFHIPA technique. Thus, the main research aim of this paper is concluded as follows: (1) the IVIFHIPA technique is constructed based on IVIFHIWA technique and classical power average (PA) technique; (2) the IVIFHIPA technique is put forward to cope with the MADM under IVIFSs; (3) an empirical example for operational quality evaluation of industry-finance integration enterprises under lean management accounting has been put forward to show the IVIFHIPA technique.

ESG practices and bank efficiency: new evidence from an oil-driven economy

PurposeThe purpose of this paper is to investigate whether banks’ environmental, social and governance (ESG) initiatives increase or decrease banks’ efficiency.Design/methodology/approachThe sample used includes all listed banks in Saudi Arabia over the years 2016–2021. The authors performed different methods, including data envelopment analysis (DEA), ordinary least squares (OLS) and quantile regressions.FindingsThe OLS regression results show a negative linkage between ESG and banks’ efficiency. Further, the quantile regression analysis indicates that the ESG effect on banks' efficiency is negative across different quantiles. However, the DEA method shows that the DEA-generated scores for Banks’ efficiency are higher for ESG-adjusted scores in comparison to efficiency scores without incorporating ESG. Further, the comparison of the DEA-generated efficiency scores, over the sample period, of adjusted ESG banks still suffers from decreasing in their efficiency over the years. Concerning existing theory, the results are consistent with the stakeholders and the resource-based theories postulating that banks' ESG practices are ethical commitments and enable firms to gain competitive advantage and increase their reputation among stakeholders.Practical implicationsThe findings of this study offer important implications for regulators and bankers. Policymakers and bank regulators should make collective efforts to encourage financial institutions to adopt green finance initiatives to create an efficient financial system capable of counteracting risks from the external environment and stimulating economic growth. Banks’ managers should be aware that ESG initiatives serve society and the environment and offer a positive influence on banks’ efficiency.Originality/valueTo the best of the authors’ knowledge, this is the first study to explore the influence of ESG activities on banks' efficiency using DEA for banks in Saudi Arabia.

Justice and finance: Does judicial efficiency contribute to financial system efficiency?

Efficient financial systems play a crucial role in promoting economic growth and development. This study explores the impact of judicial efficiency (JE) on financial system efficiency (FSE) and its components, financial institutions efficiency (FIE) and financial markets efficiency (FME), across 108 countries over the period from 2004 to 2020. Utilizing a fixed effect regression for our baseline analysis and a two-stage least squares (2SLS) regression to address endogeneity, we find robust evidence that JE has a positive and significant effect on FSE and its components, FIE and FME. Moreover, we find that JE's positive impact on FSE and its components holds across different levels of per capita income, including high-income, low-income, and emerging market economies. Our findings, which are confirmed by several robustness checks, highlight the universal importance of a well-functioning, efficient judicial system in driving FSE regardless of a country's economic context. The results show that countries should prioritize reforms to strengthen judicial institutions and enhance efficient contract enforcement. An efficient legal framework and judicial process are conducive to creating an environment in which an efficient financial system can develop, paving the way for sustainable economic growth.

On the Correlation of Terminology in the Local Self-Government System in the Republic of Kazakhstan. Defining Terms

In contemporary conditions in Kazakhstan and other foreign countries, significant attention is given issues and problems of organizing effective local self-government (LSG). The study aims to explore the constitutional and legal regulation of LSG in Kazakhstan and to seek innovations in forming an effective financial system for LSG bodies. Various methods were used, including general (theoretical, universal) and specific (empirical or practical) research methods. The research results include the following conclusions: Government authorities and LSG bodies, along with their officials, must continuously improve the legal framework for organizing and developing an effective financial system for LSG bodies in Kazakhstan, taking into account the constitutional norms of building a legal and social state. Effective functioning of LSG bodies primarily depends on their material, technical, and financial resources. It is noted that the establishment of an efficient financial system for LSG in the modern democratic and social world is recognized as a fundamental legal foundation. This study examines the most established and widely accepted definitions of terms and concepts. The analysis and consideration of these and other related concepts are driven by the objective needs of modern times. Conclusions focus on the legal aspects of these terms and concepts, reflecting the essential features of the concept of forming an effective financial system for local self-government, its theoretical foundations, and their application to the practice of constitutional construction of a real social state in Kazakhstan. The results of the study are expected to assist legislators in drafting a high-quality law on LSG issues.

Regulatory frameworks and financial stability in Africa: A comparative review of banking and insurance sectors

This review explores the role of regulatory frameworks in ensuring financial stability in Africa, focusing on a comparative analysis of the banking and insurance sectors. Regulatory frameworks are essential for maintaining the integrity, stability, and efficiency of financial systems. By examining the historical context, development, and current state of both sectors, this review identifies the key regulatory bodies and their respective strategies and objectives. The review highlights the effectiveness of these regulatory frameworks in mitigating risks and enhancing financial stability through case studies of specific African countries, including South Africa, Nigeria, and Kenya. In the banking sector, central banks and financial regulatory authorities enforce regulations aimed at maintaining capital adequacy, managing non-performing loans, and ensuring risk management and compliance. In contrast, the insurance sector's regulatory bodies focus on solvency requirements, risk assessment, and consumer protection. Also underscores the importance of coordination between regulatory bodies to address challenges such as regulatory arbitrage and technological advancements. The comparative review reveals that while both sectors have made significant strides in regulatory development, they face unique challenges and opportunities. The banking sector is grappling with issues of financial inclusion and digital transformation, whereas the insurance sector is striving to improve market penetration and literacy. The review also discusses the impact of regulatory interventions on financial stability, showcasing successful examples from selected countries. The findings suggest that robust regulatory frameworks are critical for fostering sustainable financial stability. Recommendations for enhancing regulatory effectiveness include strengthening coordination among regulatory bodies, enhancing capacity-building, and leveraging technology for better compliance. The review concludes with an outlook on emerging trends in financial regulation and the prospects for maintaining financial stability in Africa, emphasizing the need for continued international cooperation and support. Keywords: Regulatory Frameworks, Financial Stability, Africa, Banking sectors, Review.

Rancang Bangun Sistem Financial Accounting Standars Berbasis Website Pada CV. Hartop Jaya

Abstract
 The financial accounting standard system is the system used to manage financial data at CV Hatop Jaya. In today's digital era, the use of web technology and scrum methods can be used to develop a more efficient and accurate financial accounting standard system. This study aims to design and develop a web-based financial accounting standard system using the Scrum method. The Scrum method is used throughout the system development process, from requirements analysis to testing. By using the Scrum method, this research enables the development of a more structured and adaptive web-based financial accounting standard system. Researchers can leverage the principles of Scrum to ensure needs are met efficiently and set the right priorities. This research is expected to contribute to the development of a more efficient financial accounting standard system. The Scrum method still provides a framework that is focused, organized, and responsive to change, thereby helping researchers manage financial data and create financial reports more effectively within the scope of work performed. The system developed in this study can be used by CV Hartop Jaya to manage their financial data and make financial reports easily and quickly. In addition, this research can also be a reference for further research in developing a web-based financial accounting standards system.programming language and uses the MySql Database because it is more accessible to users.
 Keywords: financial, accounting, Scrum

Financial Development Convergence: Evidence from Top and Bottom Globalised Developing Economies

ABSTRACT This paper investigates the pattern of the financial development convergence for the top (Europe and Central Asia) and the bottom (South Asia) globalized developing regions from 1984 to 2016. We employ the Philips-Sul club convergence approach to measure the financial development convergence’s speed. The results validate the convergence of financial development in all countries, including the top and bottom of globalized developing regions. Interestingly, the speed of financial development convergence is less in the bottom globalized developing region than in the top globalized developing region. However, these results vary across developing regions in the case of financial institutions and financial markets. Therefore, solid financial market governance can provide a productive and efficient financial system, particularly in the bottom globalized economies.

Does institutional quality matter in the financial Development-Economic complexity Nexus? Empirical insights from Africa

PurposeThis study examines the moderating role of institutional quality and its threshold in the African financial development-economic complexity nexus. This objective follows the argument that institutional quality influences the financial system's efficiency in allocating resources to innovative initiatives and activities that increase productivity knowledge and technical capabilities in an economy's production system to produce complex products and exports. Design/methodology/approachTo achieve these objectives, this study adopts novel and robust approaches such as the system generalized method of moments (GMM), the Driscoll-Kraay nonparametric covariance matrix estimator (DK), the method of moments quantile regression, and a dynamic panel threshold to analyze the annual dataset of 29 African countries covering 1995–2020. FindingsThis study establishes robust and persistent evidence of interdependence, intertwining, and heterogeneity among African countries. Both mean-based (GMM and DK) and quantile regressions consistently demonstrate that financial development and institutional quality separately enhance Africa's economic complexity across quantiles. In contrast, institutional quality drains financial development's contribution to economic complexity when the coefficients are significant. The moment-quantile regression reveals that institutional quality complements financial development to support economic complexity from the 10th to 30th quantiles, but the coefficients are insignificant. The threshold estimation confirms nonlinearity and the institutional quality threshold estimate is 5.73 on the ordinal scale of 10. On average, only six African countries exceed the threshold, while others operate below the benchmark. Research limitations/implicationsBased on the findings, African financial systems operate within weak institutional frameworks. These phenomena allow rent-seeking, opportunism, corruption, and sharp practices, which divert financial resources from innovative activities and investments in research and development, human capital development, technology, high-tech infrastructure, and entrepreneurial innovation. As a result, Africa's institutional quality impairs the financial sector's ability to spur economic complexity upgrades. African economies need better institutional architectures to maximize financial development's benefits of upgrading economic complexity. The policy implications and recommendations of this study are more relevant to African settings and situations. Thus, other scholars are encouraged to conduct similar research for other continents to enrich the study’s outcomes. Originality/valueThe following are the highlights of this study's novelties: 1.) To the best of the authors' knowledge, this is the first study to examine the moderating role of institutional quality in the financial development-economic complexity nexus in Africa using estimators that account for cross-sectional dependence, distributional effects, and heterogeneous effects (the Driscoll-Kraay nonparametric covariance matrix estimator (DK) and the method of moment quantile regression). 2.) Unlike earlier research, this study establishes a threshold of institutional quality in the financial development-economic complexity nexus. We propose that the institutional structures that govern Africa's financial systems be examined and trimmed. This move helps to phase out the inherent inadequaciesthat drain financial development's contributions to economic complexity.

Does Entrepreneurial Financial Support Guarantee New Ventures’ Performance via Competitive Advantage and Innovation? Empirical Answers from Ho Chi Minh City Region, Vietnam

This research applied the resource-based view (RBV) theory to examine the effects of entrepreneurial financial support on new ventures’ performance via competitive advantage and innovation. A questionnaire survey was performed to collect data from 315 entrepreneurs of new ventures in the Ho Chi Minh City region. A quantitative method was applied, and partial least squares structural equation modeling (PLS-SEM) was utilized to confirm the significant relationships among variables of the research model. The findings demonstrated that all financial and operational performances of new venture constructs in this research model were completely supported. Furthermore, entrepreneurial financial support had the strongest direct and indirect effects on firm innovation and competitive advantage, while firm innovation and competitive advantage fully mediated relationships between entrepreneurial financial support and firms’ financial and operational performance. Hence, this research solved extant debates in the literature, concurrently enhancing the RBV theory in the entrepreneurship context. In the post-COVID-19 pandemic era, it offers novel insight for governors and other stakeholders to build an efficient financial support system, while providing entrepreneurs with strategies to leverage said system to develop innovation for achieving better competitive advantage, leading to higher firm performance.

Smallholder crop farmers’ attributes for formal financial services in Nigeria: An analysis

Financial services to the agricultural sub-sector in Nigeria and particularly to small farmers is difficult because financial institutions have specific requirements that must be met. Many small farmers are hardly serviced and this has affected the growth of the sector. Nevertheless, understanding the nature of the sector and peculiarities of categories of farmers will help build an efficient financial system that is beneficial to farmers and financial institutions alike. This study examined attributes of formal financial institutions smallholder crop farmers prefer for better financial services in Nigeria. Data were elicited from the six agro-ecological zones of the country using the extension officers in Agricultural Development Projects (ADP) of the different states. A total of 399 smallholder crop farmers were sampled and the study used the conjoint technique and multinomial logistic technique in analyzing the data. Results revealed that financial services such as loan, insurance, account opening, credit/debit cards, and funds transfer, were highly rated and preferred by most smallholder crop farmers. However, these farmers were more inclined to loans that were customized (flex loans), insurance claims due within 90 days, savings account opening, cash points for credit/ debit cards within a kilometer of their residence, and funds transferred in 24 hours. Conjoint analysis of the key variables showed that funds transfer within 24 hours was the only significant variable; and the interaction effect (trade-off effect) of this variable with others revealed that, an average smallholder crop farmer would rather prefer loan that is customized, insurance claim within 90 days, and a cash point within a kilometer of his residence to funds that would take longer than 24hrs to arrive. The multinomial result showed that a farmer’s level of education, gender, and farm size were key determinants of an average farmer’s choice of a financial institution. The study, therefore, recommends that, financial institutions should optimize their services in terms of funds transfer and accessibility, and should emphasize only services that are important so as to operate maximally. JEL Classification: Q14, G21, G22, G29, G41. Keywords: Formal financial services, Nigeria, smallholder crop farmers, conjoint analysis, multinomial logistic

Pengimplementasian Kebijakan Desentralisasi dan Otonomi Daerah Terhadap Hubungan Keuangan Daerah Pusat dan Daerah

The effects of decentralization and regional autonomy on Indonesia's federal-regional financial ties are the subject of this brief study. Patterns of financial interactions in the implementation of regional autonomy, changes to statutory rules, and the history of central and regional financial legislation are all part of the issue. The development of efficient financial systems requires substantial work, but regional autonomy also affords regions the chance to boost their own financial performance. The structure of central-regional financial connections may be affected by decentralization and regionalautonomy policies; how prepared institutions are, available human resources, financial management systems, and budget submission procedures are all crucial factors to consider. Implementing decentralization and regional autonomy policies in Indonesia is expected to have a good influence on financial ties between the center and regions if these aspects are carefully considered.

Volatility challenges for natural resources during COVID-19 and its impact on economic development for sustainable economic repossession

Considering an economy with abundance of natural resources, one can perceive that the country has strong economic growth. However, it appears to be invalid in various cases Besides, efficient financial systems also play sincere role in natural resource export to spill a positive effect on country's economy. As of now, economic and financial growth are being significantly affected by the day-to-day increase in prices of natural resources as the rising eco-financial growth demands more natural resources. During pandemic, the economies of Asian countries are adversely affected due to slow economic activities. Thus, the current study offers policy recommendations for economic recovery through the investigation of dependency between the price volatilities of natural resources and financial/economic developments. By taking the data from the economies of six Asian countries, we link the proposed relationship during pandemic era. With the application of DOLS and FMOLS, we find that the volatility of natural resources and financial innovations have a determinantal effect on the financial and economic developments of Asian countries. We further identify that financial innovations have a positive impact on the economic recovery of the countries under study, while the proper management of natural resources and less volatility in price commodities could positively contribute towards economic repossession.

Assessing the Impact of Banks’ High-Tech Investments on Efficiency: What Is the Actual Relationship Direction?

This paper analyses whether there is any relationship between the efficiency level achieved by Euro Area banking groups and their attitude toward high-tech investments proxied by high-tech patents. We measure banking efficiency via Data Envelopment Analysis (DEA). The period considered is the decade between 2012 and 2021. The results obtained show that there is a generally negative relationship between the two topics under investigation. The evidence obtained justifies the importance of an appropriate level of attention by regulators since increasing levels of technological innovation pursued through significant growth in intangible assets, could negatively affect the overall financial system efficiency.

How Much Financial Development Accentuates Income Inequality in Central and Eastern European Countries?

Financial development is often associated with significant economic growth, but studies have shown that a high level of financial development can be the cause of deepening income inequality in many countries. The main objective of the proposed study is to identify to what extent financial development influences income inequality in Central and Eastern European Countries (CEEC). Thus, for the model specification we used as dependent variable the Gini coefficient and as independent variable the financial development index. The sample period for the analysis was from 2004 to 2019, restricted by the lack of data on the Gini coefficient in CEECs. Data on the financial development index were collected from International Monetary Fund, and data on the Gini coefficient were extracted from the World Bank’s Poverty and Inequality Platform. The study unravels several contributions. First of all, the use of quantile regression allowed for the examination of the effects of financial development across the entire distribution of income inequality. Second of all, the use of a comprehensive financial development index offered a more robust and comprehensive measure of financial development compared to single indicators. Taking into account that the Gini coefficient must be close to zero, this result was a positive one with, in essence, financial development reducing income inequality in CEECs. Thirdly, the specific focus on CEECs fills a gap in the literature. Finally, the findings of this study have important policy implications. The obtained results indicate a negative causal relationship between financial development and income inequality, emphasizing the fact that the relationship between these two components cannot be generalized for all regions. These might include measures to promote financial inclusion, improve financial literacy, and enhance the stability and efficiency of financial systems. Supporting financial development in CEECs and similar transition economies can be an effective strategy for tackling income inequality.