Financial Development and Inequality: Brazil 1985-1994

Manoel Bittencourt ()

No 164, Ibero America Institute for Econ. Research (IAI) Discussion Papers from Ibero-America Institute for Economic Research

Abstract: We examine the impact of financial development on earnings inequality in Brazil in the 1980s and first half of the 1990s. The evidence– based on panel-time series data and analysis–shows that financial development had a significant and robust effect in reducing inequality during the period. We suggest that this is not only because the poorer can invest the acquired credit in either short or long-term productive activities, but also because those with access to financial markets can insulate themselves against recurrent poor macroeconomic performance, which is exemplified by high rates of inflation. The main implication of the results is that a deeper and more active financial sector, alleviates the high inequality seen in Brazil without distorting economic efficiency.

Keywords: Financial development; inequality; Brazil (search for similar items in EconPapers)
JEL-codes: D31 E44 O11 O54 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2007-10-10
New Economics Papers: this item is included in nep-dev, nep-lam and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Financial development and inequality: Brazil 1985–1994 (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:got:iaidps:164

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