Determinants of Income Inequality In Pakistan

Abstract

This study has focused mainly on identifying the impact of finance on inequality in Pakistan. This study has considered financial development, financial liberalization, and financial instability as independent variables. Whereas, income inequality has been considered as the dependent variable. However, this study has collected data the period of 2010-2019 with the help of secondary sources (official websites of Ministry of Finance, State Bank of Pakistan, and Stock Exchange of Pakistan) to explore the relationship between financial development, financial liberalization, and financial instability (independent variables) and income inequality (dependent variable) in Pakistan. To prove this relationship, a scale has been set which ranges 5% of the significance level in order to test the acceptance and rejection of hypotheses of this study. In addition, statistical instruments have been used to testify the relationship between variables of this study. Some of the statistical instruments used in this study includes correlation, regression, etc. Results derived through statistical instruments have shown that there exists a significant relationship between financial development, financial liberalization, and financial instability (independent variables) and income inequality (dependent variable) in Pakistan. Conclusively, financial development negatively impacts income inequality in Pakistan. Whereas, financial liberalization and financial instability positively impacts income inequality in Pakistan.