The impact of financial openness on income inequality

Cheng Zhou ()
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Cheng Zhou: Xi'an University of Technology

Economics Bulletin, 2022, vol. 42, issue 4, 1931 - 1945

Abstract: This study empirically analyzes the impact of financial openness on income inequality using a sample of 68 countries from 1980 to 2019. The main finding is that financial openness expands income disparity by increasing the income share of high-income groups while decreasing the income share of low-income groups. In developing countries, financial openness has the largest positive impact on income inequality, emerging market countries are second, and developed countries are third. External shocks, which are transmitted through the interplay of the exchange rate and interest rate channels, exacerbate income inequality as a result of financial openness.

Keywords: Income inequality; Financial openness; Income quartile (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2022-12-30
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