Measurement And Impact Analysis Of Financial Openness And Income Inequality

As an important part of high-quality economic development in the new era,financial openness can effectively improve the domestic financial system while promoting sustained and stable economic growth,which in turn affects the income inequality situation.The study of the relationship between financial openness and income inequality is related to social issues such as narrowing the income gap among residents,improving the development of the financial sector,and providing important guarantees to promote common prosperity for all people.Therefore,it is of great theoretical significance and practical value to conduct indepth research on the measurement of financial openness and income inequality and its impact.The thesis selects 31 provinces(autonomous regions and municipalities directly under the central government)in China as the research objects,measures the level of financial openness of each province through the improved LMF method,calculates the Thiel index to measure income inequality,and analyzes the correlation between the two.A benchmark regression is conducted by adding variables progressively,and on this basis,the impact of financial openness on income inequality is analyzed using a panel threshold regression model.Regional heterogeneity was also studied by dividing the study population into four groups according to economic zones.The following conclusions were obtained from the study:(1)The average level of financial openness in each province of China has been on the rise in recent years,income inequality has been continuously alleviated,and there is a nonlinear negative correlation between financial openness and income inequality.(2)From the national data,the level of financial openness,urbanization level,industrial structure,population age structure,government expenditure level and economic development level all have significant effects on income inequality.The relationship between financial openness and income inequality shows a typical and robust inverted “U-shaped” nonlinear relationship.While financial liberalization may increase income inequality in the early stage due to the imperfection of related institutions,a high level of financial liberalization will have a dampening effect on income inequality.The empirical results based on the panel threshold regression model also support the above conclusion.(3)There are obvious imbalances in the level of financial openness and income inequality in each region of China,and there are large differences among regions.The empirical analysis is conducted separately for the data of each region,and the results of the benchmark regression show that financial openness in the eastern,western and northeastern regions have a significant non-linear effect on income inequality,while the effect in the central region is not significant.The panel threshold regression results on this basis show that for the non-linear effect of financial openness on income inequality,there is no threshold effect in the eastern region,and a single threshold effect exists in the central,western and northeastern regions.Financial liberalization in each region has different effects on income inequality at different stages of development,and its effects vary by region.Finally,research conclusions and recommendations are proposed based on the empirical results.Each region should address income inequality in parallel with multiple initiatives according to local conditions.Meanwhile,they should pay attention to the positive and negative effects of financial openness on the economy and society,solidly promote and deepen the reform of the financial industry and its opening to the outside world,and achieve a higher level of openness while ensuring the safety of financial openness.