Does income inequality contribute to credit cycles?

Tuomas Malinen

The Journal of Economic Inequality, 2016, vol. 14, issue 3, No 4, 309-325

Abstract: Abstract Recent literature presented arguments linking income inequality to the financial crash of 2007–2008. One proposed channel is expected to work through bank credit. I analyze the relationship between income inequality and bank credit in a panel cointegration framework and find that they have a long-run dependency relationship. Results show that income inequality contributed to the increase of bank credit in developed economies after the Second World War.

Keywords: Top 1 % income share; Bank credit; Cointegration; Granger causality (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10888-016-9334-6

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