Financial inclusion, rather than size, is the key to tackling income inequality

David Martínez Turégano and Alicia Garcia-Herrero
Authors registered in the RePEc Author Service: Alicia Garcia Herrero

Working Papers from BBVA Bank, Economic Research Department

Abstract: In this paper we assess empirically whether financial inclusion contributes to reducing income inequality when controlling for other key factors, such as economic development and fiscal policy. We conclude that financial inclusion contributes to reducing income inequality to a significant degree, while the size of the financial sector does not. The policy implication of this result is that financial inclusion should be at the forefront of government policies to reduce income inequality in a given economy. Given the broad way in which we have defined inequality in our empirical analysis, this means facilitating the use of credit to both households, especially low-income ones, as well as to small and medium-sized enterprises.

Keywords: Emerging Economies; Financial Inclusion; Research; Working Paper (search for similar items in EconPapers)
JEL-codes: D63 F63 F65 G21 H23 O15 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-02
New Economics Papers: this item is included in nep-pbe and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bbv:wpaper:1505

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