Abstract
The present study analyzes the impact of financial sector development, institutional quality and energy prices on income inequality using panel data for 12 Asian developing countries for the time period 1990-2015. Fully Modified OLS has been applied to determine the long run relationship among the variables. The results of the study suggest that institutions affect income inequality positively, which means with the enhancement of institutions the inequality rises. Financial development and income distribution also have positive and significant relationship. The coefficient of energy prices is positively related to income inequality. The study concludes that the role of institutions in income inequality is highly important and the impact of financial development on poor class of the society is significant. This calls for appropriate measures to monitor the energy prices. The study suggests that the role of government in reducing income inequality is indispensable and government should invest in health, education and worker’s training for improving the standard of living of the poor.