Inequality and Private Credit

Ronald Fischer, Diego Huerta and Patricio Valenzuela
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Diego Huerta: Central Bank of Chile

Working Papers from University of Pennsylvania, Wharton School, Weiss Center

Abstract: This article examines whether the direction of the effect of inequality on private credit depends on the capital constraints of individual countries, as predicted by Balmaceda and Fischer (2010). Consistent with the model's predictions, we find that greater income inequality leads to a higher ratio of private credit to GDP in economies with low incomes and weak legal rights, whereas the reverse is true in economies with high incomes and strong legal rights.

JEL-codes: F34 G15 G21 G38 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-ger
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Working Paper: Inequality and Private Credit (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:upafin:15-12

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