Distributional Effects of Structural Reforms in Developing Countries: Evidence from Financial Liberalization

Kwamivi Mawuli Gomado ()
Additional contact information
Kwamivi Mawuli Gomado: Normandie Université, 25 Rue Philippe Lebon, BP 1123

Open Economies Review, 2024, vol. 35, issue 5, No 6, 1084 pages

Abstract: Abstract This paper examines the redistributive effects of financial liberalization, including domestic and external finance reforms, implemented in 64 emerging and low-income countries over the past four decades. To identify these effects, we employ a “doubly robust” estimation approach and generate impulse responses using the local projections method. Our findings reveal that financial reforms significantly reduce income inequality. These results are robust and hold across various specifications and alternative methods. We find that reducing income inequalities through financial reforms depends on several factors, including improved access to financial services, level of public expenditures, and institutional quality. Furthermore, we demonstrate that governments adopting a reform approach that considers sequencing and potential complementarity of measures can significantly reduce income inequality. Taking the business cycle into account, we observe that implementing financial reforms during periods of relatively slower economic growth would be more beneficial for developing countries. Financial reforms have an impact on reducing income inequality by increasing the income of individuals located at the bottom of the distribution while decreasing the income of individuals located at the top of the distribution.

Keywords: Financial reforms; Inequality; Local projection method; Business cycle; E61; D31; J48; C54 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11079-023-09740-7 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:openec:v:35:y:2024:i:5:d:10.1007_s11079-023-09740-7

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11079/PS2

DOI: 10.1007/s11079-023-09740-7

Access Statistics for this article

Open Economies Review is currently edited by G.S. Tavlas

More articles in Open Economies Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().