Sectoral capital flows and income inequality

Ankit Kumar and Pradyumna Dash

Finance Research Letters, 2024, vol. 66, issue C

Abstract: The relationship between capital flows and income inequality has received increased attention in recent years. Using local projection, this paper investigates the impact of sectoral capital flows, encompassing net corporate flows, net bank flows, and net sovereign flows, on income inequality in 83 economies. The findings reveal that a rise in net bank flows tends to decrease inequality, particularly in economies where regulations support extending credit to marginalized sectors. In contrast, an upsurge in net corporate flows exacerbates income inequality, especially in economies characterized by lower labor income and higher equity dividends.

Keywords: Bank flows; Corporate flows; Income inequality (search for similar items in EconPapers)
JEL-codes: E43 E58 F4 G12 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:66:y:2024:i:c:s154461232400655x

DOI: 10.1016/j.frl.2024.105625

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