Borrow to be the poor or the rich? It depends: Credit market and wealth accumulation

Bangzheng Wu, Pengpeng Yue and Shengqiang Zuo

International Review of Economics & Finance, 2023, vol. 86, issue C, 804-821

Abstract: We investigate the relationship between access to credit and wealth accumulation to understand the rising wealth inequality. Empirical results suggest an asymmetric heterogeneity over the whole range of wealth distribution. There is a significantly negative relationship between household debt and wealth accumulation for poor households but a significantly positive relationship for wealthy households. Wealthy households could better benefit from the investment debt, but poor households fail. We discuss the two channels of entrepreneurship and investment behaviors. This paper contributes to the literature on wealth distribution by mapping the relationships between the credit market and household wealth accumulation.

Keywords: Wealth accumulation; Household wealth; Wealth equality; Wealth mobility; Credit market (search for similar items in EconPapers)
JEL-codes: D1 D14 G50 G51 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:86:y:2023:i:c:p:804-821

DOI: 10.1016/j.iref.2023.03.037

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