Financial structure and income inequality
Giovanni Ferri and
Leonardo Gambacorta ()
No 756, BIS Working Papers from Bank for International Settlements
This paper empirically investigates the link between financial structure and income inequality. Using data for a panel of 97 economies over the period 1989-2012, we find that the relationship is not monotonic. Up to a point, more finance reduces income inequality. Beyond that point, inequality rises if finance is expanded via market-based financing, while it does not when finance grows via bank lending. These findings concur with a well-established literature indicating that deeper financial systems help reduce poverty and inequality in developing countries, but also with recent evidence of rising inequality in various financially advanced economies.
Keywords: inequality; finance; banks; financial markets (search for similar items in EconPapers)
JEL-codes: G10 G21 O15 D63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn and nep-fdg
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Working Paper: Financial structure and income inequality (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:756
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