Curse or blessing? The effect of inequality on financial development

Yin-Fang Zhang, Antonio Savoia and Kunal Sen

No wp-2025-59, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: An important feature of the process of transformation in developing economies is the depth and outreach of their capital and credit markets, i.e. financial development. As this is often considered crucial to support growth and poverty reduction, it is important to understand what structural factors drive it. The literature so far has assessed the role of historical, political, cultural, and institutional determinants, but has not yet adequately investigated the role of inequality. This paper addresses this lacuna by empirically investigating its effects.

Keywords: Econometric models (Finance); Income inequality; Capital market; Financial markets; Sustainable development (search for similar items in EconPapers)
Date: 2025
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