Examining the effect of financial development on income distribution in the framework of the Financial Kuznets Curve: Examples of next 11 countries

Studies examining the relationship between financial development and income distribution are frequently encountered in the literature. The relationship between financial development and income distribution and its results have been and continue to be a very interesting research topic for financiers, economists and social scientists. Financial development and income distribution in countries depend on very different parameters, thats why it may differ in countries that can be considered equivalent from the outside. Again, the results of studies with different country groups, different time series, different econometric methods and different model specifications also show differences. While examining the effect of financial development on income distribution, it is very important to determine the situation of the relations between the variables as close to reality as possible. Whether there is a cross-section dependency between the variables, whether they act together in the long run, The use of tests that take into account the structural and non-structural shocks that may have been experienced will increase the probability of reaching results that reflect the truth. When these situations are ignored, the existing relationships between the variables will not be revealed and the reliability of the analyzes will decrease. For this reason, it is thought that the use of new generation panel data approaches, which have been used in recent years by improving the deficiencies of traditional tests, will increase the reliability of the results to be obtained from the studies. In this study, the effect of financial development on income distribution in the Future-11 country group, which has not been examined in the literature before, is examined within the framework of the Financial Kuznets Curve hypothesis, using panel data analysis methods. The results of the study show that the Financial Kuznets Curve hypothesis is valid in Indonesia, Iran and Mexico. In other words, it shows that there is an inverted U relationship between income inequality and financial development in these countries. In other words, in Indonesia, Iran and Mexico, financial development first increases income inequality, and after reaching a certain threshold, the level of income inequality decreases.