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Finance and Inequality

Martin Cihak () and Ratna Sahay

No 2020/001, IMF Staff Discussion Notes from International Monetary Fund

Abstract: The study examines empirical relationships between income inequality and three features of finance: depth (financial sector size relative to the economy), inclusion (access to and use of financial services by individuals and firms), and stability (absence of financial distress). Using new data covering a wide range of countries, the analysis finds that the financial sector can play a role in reducing inequality, complementing redistributive fiscal policy. By expanding the provision of financial services to low-income households and small businesses, it can serve as a powerful lever in helping create a more inclusive society but—if not well managed—it can amplify inequalities.

Keywords: Income inequality; Financial inclusion; Financial services; Income distribution; Financial sector; SDN,income,Gini coefficient,financial system,market Gini index (search for similar items in EconPapers)
Pages: 50
Date: 2020-01-17
New Economics Papers: this item is included in nep-fdg and nep-mac
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