Nexus between Financial Development and Inequality : An Empirical Investigation of Financial Kuznets Curve for Selected EU Countries

This article examines the relationship between financial development and income inequality for selected EU countries by using fixed effects panel data estimator over the years 2004-2015. Our empirical results show that financial development ultimately causes an increase in income inequality which means there is U-shaped relationship between financial development and income inequality. In addition, the effect of globalization on income inequality is strong and statistically significant with inverted-U shaped relationship. Briefly, empirical findings lead to reject the financial Kuznets curve. Thus the findings are inconsistent with Greenwood and Jovanovich (1990) hypothesis