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The rich, poor, and middle class: Banking crises and income distribution

Mehdi El Herradi () and Aurélien Leroy
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Aurélien Leroy: BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique

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Abstract: How do banking crises affect rich, middle-class and poor households? This paper quantifies the distributional implications of banking crises for a panel of 132 economies over the 1970–2017 period. We rely on different empirical settings, including an instrumental variable approach, that exploit the geographical diffusion of banking crises across borders. Our results show that banking crises systematically reduce the income share of rich households and positively affect middle-class households. We also find that income inequality increases during periods preceding the occurrence of a banking crisis.

Keywords: Banking crises; income distribution; inequality (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ban, nep-his and nep-hme
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Published in Journal of International Money and Finance, Elsevier, 2022, 127, pp.102695. ⟨10.1016/j.jimonfin.2022.102695⟩

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Working Paper: The rich, the poor, and the middle class: banking crises and income distribution (2021) Downloads
Working Paper: The rich, the poor, and the middle class: banking crises and income distribution (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03770620

DOI: 10.1016/j.jimonfin.2022.102695

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