Credit market depth and income inequality in Vietnam: A panel-data analysis. Financial development could exert various effects on income distribution of a country. By employing Generalized Method of Moment, this paper aims at examining the impacts of credit market depth, one of most used financial development barometers, on income inequality in Vietnam. | Journal of Economics and Development, , , August 2016, pp. 5-18 ISSN 1859 0020 Credit Market Depth and Income Inequality in Vietnam: A Panel-Data Analysis Le Quoc Hoi National Economics University, Vietnam Email: hoilq@ Chu Minh Hoi Vietnam Academy of Economics, Vietnam Email: cminhhoi@ Abstract Financial development could exert various effects on income distribution of a country. By employing Generalized Method of Moment, this paper aims at examining the impacts of credit market depth, one of most used financial development barometers, on income inequality in Vietnam. The empirical findings show that expanding credit market in the country could lead to higher income inequality. We have not found evidence that supports the hypothesis of an inverted U-shaped relation ever introduced by Greenwood and Jovanovich, although this hypothesis may still hold in a sense that Vietnam has not reached to the inflection point to generate such a curve alike. Keywords: Financial development; inequality; Vietnam. Journal of Economics and Development 5 Vol. 18, , August 2016 1. Introduction 2014a). Also according to World Bank (2014a), 76% of urban population and 53% of their rural counterpart in Vietnam expressed concerns the uptrend of inequality. More strikingly, the expression of adolescent and young population is more intensified than that of other groups, which means the perception at least in one next generation will increase. And inequality is one of major determinants that influence a developing country like Vietnam to be able to escape from middle income trap (Ohno, 2010). Vietnam kicked off its economic reform since 1986 and has made a number of remarked achievements until present. Opening and liberalizing domestic markets and gradual integration into the world economy transformed a poor country with majority of population working in agricultural sector to a lower middle income country in around two decades. In period 1990-2010 .
