Investigating the Relationship between Gini Coefficient of Income Strata and Financial Depth in Iran

Increasing financial depth is one of the main concerns of policy makers as a prerequisite for economic growth. And since poverty is one of the most important economic and social complications as well as a barrier for reaching financial development, this study tries to investigate the effects of the Gini coefficient, as a poverty measure for income strata, on financial depth during the time period between 1990 and 2011 using combinatorial data analysis. The results of the study show that there is a positive relationship between Gini coefficient in each income stratum and financial depth, which implies that increasing the financial depth does not decrease poverty in each income stratum. Moreover, there is a negative relationship between government expenses and financial depth in Iran. On the other hand, it can be said that increasing the degree of economic openness and inflation have a positive impact on financial depth.