Financial structure and income inequality
Giovanni Ferri and
Leonardo Gambacorta ()
No 13330, CEPR Discussion Papers from C.E.P.R. Discussion Papers
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: banks; Finance; financial markets; inequality (search for similar items in EconPapers)
JEL-codes: D63 G10 G21 O15 (search for similar items in EconPapers)
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Working Paper: Financial structure and income inequality (2018)
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