Download fulltext HTML
Dian Saraswati, B., Maski, G., Kalug, D., & Kresna Sakti, R. (2020). Does Financial Technology Affect Income Inequality in Indonesia?. KnE Social Sciences, 4(7), 151–161. https://doi.org/10.18502/kss.v4i7.6850

https://doi.org/10.18502/kss.v4i7.6850

statistics

  • 607 Abstract Views
  • 361 PDF Views
  • 0 HTML Views

authors

  • Birgitta Dian Saraswati

    Birgitta Dian Saraswati

    Faculty of Economics and Business, Brawijaya University
  • Ghozali Maski

    Ghozali Maski

    Faculty of Economics and Business, Brawijaya University
  • David Kalug

    David Kalug

    Faculty of Economics and Business, Brawijaya University
  • Rachmad Kresna Sakti

    Rachmad Kresna Sakti

    Faculty of Economics and Business, Brawijaya University

Published Date

  • Apr 23, 2020

Does Financial Technology Affect Income Inequality in Indonesia?

KnE Social Sciences / The 3rd International Research Conference on Economics and Business / Pages 151–161

Abstract

Economic growth is insufficient to be a sole indicator of the population’s welfare. Specifically, high economic growth does not necessarily imply that the population is generally prosperous. Equal income distribution is crucial to achieving sustainable economic growth. Since 2000, the Gini index as a measure of income inequality in Indonesia showed an increasing trend. On the other side, financial technology 3.0 started to develop. This paper seeks to investigate the impact of fintech 3.0 development on income inequality in Indonesia and to identify the determining factors of income inequality in Indonesia. By using the partial adjustment model (PAM) with the observation period of 1990-2017, the study empirically shows that fintech 3.0 development that started in 2000 had a significant impact on income inequality in Indonesia. Besides, the investment variable also positively affect income inequality in Indonesia. Thus, the findings indicate that the Indonesian population did not equally utilize fintech development.


Keywords: income inequality, financial technology, Indonesia, partial adjustment model

References
[1] World Bank, “World Development Indicators,” 2019.

[2] E. Dabla-Norris, K. Kochhar, N. Suphaphiphat, F. Ricka, and E. Tsounta. (2015). Causes and Consequences of Income Inequality: A Global Perspective, Staff Discuss. Notes, vol. 15, no. 13, p. 1.

[3] Badan Pusat Statistik Indonesia. (2019). Gini Ratio Provinsi 2019.

[4] N. P. R. Deyshappriya. (2017). Impact of Macroeconomic Factors on Income Inequality and Income Distribution in Asian Countries, Adbi Work. Pap., no. 696.

[5] A. Afandi, V. P. Rantung, and H. Marashdeh. (2017). Determinant of income inequality in Indonesia. Econ. J. Emerg. Mark., vol. 9, no. 2, pp. 159–171.

[6] A. Okatch, Zelda; Siddique, Abu; Ramohan. (2015). ECONOMICS DETERMINANTS OF INCOME INEQUALITY IN BOTSWANA. Discuss. Pap., vol. 13.

[7] K. Munir. (2017). Macroeconomic determinants of income inequality in India and Pakistan. Theor. Appl. Econ., vol. 24, no. 4, pp. 109–120.

[8] H.-Y. Lee, J. Kim, and B. C. Cin. (2013). Empirical Analysis on the Determinants of Income Inequality in Korea. Int. J. Adv. Sci. Technol., vol. 53, no. April, pp. 95–110.

[9] P. Monnin. (2014). Inflation and Income Inequality in Developed Economies. SSRN Electron. J., no. May.

[10] P. Tridico. (2018). The determinants of income inequality in OECD countries. Cambridge J. Econ., vol. 42, no. 4, pp. 1009–1042.

[11] Otoritas Jasa Keuangan OJK. (2019). Ikhtisar Keuangan Fintech Periode Februari 2019.

[12] Todaro Michael and Smith. (2014). Economic Development, 12th ed. Pearson.

[13] B. SU and A. HESHMATI. (2013). Analysis of the Determinants of Income and Income Gap Between Urban and Rural China. China Econ. Policy Rev., vol. 02, no. 01, p. 1350002.

[14] A. Bakare. (2012). Measuring the Income Inequality in Nigeria: the Lorenz Curve and Gini Co-efficient Approach. Am. J. Econ., vol. 2, no. 1, pp. 47–52.

[15] E. Thalassinos, E. Ugurlu, and Y. Muratoglu. (2012). Income inequality and inflation in the EU. Eur. Res. Stud. J., vol. 15, no. 1, pp. 127–140.

[16] A. Odusola, G. A. Cornia, and H. Bhorat. (2017). Income Inequality Trends in sub-Saharan Africa Edited by.

[17] C. Casti and C. Casti. (2018). Income Inequality and Financial Development: a Multidimensional Approach Income inequality and … nancial development: a multidimensional approach. Evidence from panel data. pp. 0–17.

[18] X. Hou, S. Li, and Q. Wang. (2018). Financial Structure and Income Inequality: Evidence from China. Emerg. Mark. Financ. Trade, vol. 54, no. 2, pp. 359–376.

[19] S. R. D. Setiawan. (2016). Siapa Sangka Fintech Sudah Berkembang Sejak 1950-an. 29-Aug-2016. [Online]. Available: https://money.kompas.com/read/2016/08/29/
133000326/Siapa.Sangka.Fintech.Ternyata.Sudah.Berkembang.Sejak.1950-an.

[20] D. N. Gujarati. (2003) Basic Econometrics, Fourth. Mc Graw Hill.

[21] H. Yue. (2011). Income Inequality, Economic Growth and Inflation: a Study on Korea. Int. J. Econ. Res., vol. 02, no. 05, pp. 14–21.

[22] T. W. Abraham. (2015). Financial Innovation and Poverty Reduction: Evidence From Rural. Work. Pap. Ser., vol. 4, no. 1, pp. 1–4.