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The human development link between financial development, poverty and income inequality: evidence from the OIC countries, based on Islamic values

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Date
2021
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Abstract
Poverty and income inequality are the two of the most pertinent global challenges facing the world economy today. Despite many attempts aimed at combating poverty and income inequality, the problem still persists. It takes more than monetary value to eradicate poverty and reduce income inequality, for the outcome would depend very much on the capabilities of the poorer segments of society. The world needs inclusive growth to ensure that the benefits of economic growth are equitably distributed across society. This research empirically investigates into the impact of financial development on poverty reduction and income inequality. However, the inconclusiveness of this relationship in the previous studies has given us a clue that this relationship may well be mediated by other contextual variables such as Islamic Human Development. Our study focuses on 30 OIC Countries from 2004 to 2016. For the first research question, we assess the impact of finance development on poverty and income inequality. The results suggest that financial development that consists of banking development and financial inclusion does not inevitably benefit the poor in the OIC countries. It shows that neither the banking development factor nor the financial inclusion factor play any significant role in poverty eradication. However, the results show negatively and significantly on income inequality. The study further finds evidence, for our second research question, that our holistic Islamic Human Development approach could help fight poverty and income inequality.
Keywords
Poverty , Income inequality , Financial development , Islamic human development , OIC countries
Citation
Md Isa, M. (2021). The human development link between financial development, poverty and income inequality: evidence from the OIC countries, based on Islamic values (Doctoral dissertation). INCEIF, Kuala Lumpur. Retrieved from https://ikr.inceif.org/handle/INCEIF/3510
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INCEIF

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