Financial structure and income inequality

Michael Brei, Giovanni Ferri and Leonardo Gambacorta

Journal of International Money and Finance, 2023, vol. 131, issue C

Abstract: We empirically investigate whether financial structures affect income inequality. Using panel data for 97 economies covering above two decades preceding the FinTech surge we uncover a non-monotonic relationship. More finance reduces income inequality up to a certain point, beyond which inequality rises if finance expands via market-based financing, while it does not when finance grows via bank lending. The finance-inequality relationship is not structurally affected by the occurrence of crises, while it is reinforced in countries featuring a higher degree of financial openness. Financial deepening always reduces inequality when it takes the form of improved financial access.

Keywords: Inequality; Finance; Banks; Financial markets (search for similar items in EconPapers)
JEL-codes: D63 G10 G21 O15 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Financial structure and income inequality (2023)
Working Paper: Financial structure and income inequality (2018)
Working Paper: Financial structure and income inequality (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:131:y:2023:i:c:s0261560623000086

DOI: 10.1016/j.jimonfin.2023.102807

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