Financial depth, income inequality, and economic transition

Chi‐Yang Chu and Mingming Jiang

Southern Economic Journal, 2021, vol. 88, issue 1, 199-244

Abstract: This article examines the evolving finance–inequality nexus during the process of economic transition. We estimate the varying marginal effects of financial depth on income inequality in every state of the transition process. Using China as an example of transition economies, we establish the causal effects of financial depth on urban income inequality and examine the estimation biases when the evolving relationship is not appropriately characterized. Along the transition process of the Chinese economy, we identify a robustly asymmetric and roughly inverted‐L shaped relationship between financial depth and urban inequality. We find that financial depth alone accounts for 11–28% of the overall variations of urban income inequality and the marginal impacts of financial depth change with the degree of credit constraint, the fraction of state ownership, and the level of economic development.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/soej.12523

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:wly:soecon:v:88:y:2021:i:1:p:199-244

Access Statistics for this article

More articles in Southern Economic Journal from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().