On the nexus between wealth inequality, financial development and financial technology

Jon Frost, Leonardo Gambacorta and Romina Gambacorta

Journal of Economic Behavior & Organization, 2022, vol. 202, issue C, 429-451

Abstract: This paper analyses the role of financial development and financial technology in driving inequality in (returns to) wealth. Using micro data from the Survey on Household Income and Wealth conducted by the Bank of Italy for the period 1991–2016, we find that wealthy households achieve higher returns than other households. With an instrumental variable approach to control for endogeneity, we find that financial development (number of bank branches) and financial technology (use of remote banking) both have a positive association with households’ financial wealth and financial returns. While households of all wealth deciles benefit from the effects of financial development and financial technology, these benefits are larger when moving toward the top of the wealth distribution. However, the economic significance of this gap fell in the last part of the sample period, as remote banking became more widespread.

Keywords: Inequality; Financial development; Banks; Financial technology; Fintech (search for similar items in EconPapers)
JEL-codes: D63 G10 G21 O15 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:202:y:2022:i:c:p:429-451

DOI: 10.1016/j.jebo.2022.08.011

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