Examination of the Relationship Between the Stock Market and Income Inequality by B-VAR Method

Abstract

The relationship between financialization and income distribution stands out with globalization. The financial system plays an important role in the generation and distribution of income. In this context, the aim of the study is to analyze the relationship between stock markets and income inequality in Türkiye. The study analyzes whether there is a long-run relationship between the series for the period 2002-2021 using the B-VAR method, which allows estimating the relationship between indicators with a priori information. Thus, the impact of changes in the stock market on the probability of affecting the fairness of income distribution is analyzed. Thus, the effect of the changes in the stock market on the probability of affecting the income distribution is examined. According to the results of B-VAR analysis, the effect of GINI coefficient on both BIST price and BIST return series is not statistically significant. This suggests that stock market investments are not correlated with income distribution but are rather short-term and profit oriented. At the same time, the fact that there are more foreign investors in BIST 100 during the period analyzed does not affect the insignificance of this relationship.