Finance and income inequality

Jakob de Haan, Regina Pleninger and Jan-Egbert Sturm

Chapter 43 in Elgar Encyclopedia of Public Choice, 2025, pp 299-308 from Edward Elgar Publishing

Abstract: This chapter takes stock of theoretical and empirical studies on the relation between financial development (FD) and financial liberalization (FL) and income inequality. Theory provides ambiguous predictions on the impact of FD and FL on income distribution. Our review suggests that the results of recent empirical research on the effect of FD and FL are mixed, although several studies suggest that finance leads to more income inequality. This evidence thus rejects the view that the poor may benefit from better access to finance. However, the measures used in most studies are imperfect proxies for access to finance.

Keywords: Financial development; Financial liberalization; Income inequality (search for similar items in EconPapers)
Date: 2025
ISBN: 9781802207743
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