Distributional income effects of banking regulation in Europe

Lars Brausewetter, Melina Ludolph and Lena Tonzer

No 24/2023, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: We study the impact of stricter and more harmonized banking regulation along the income distribution using household survey data for 25 EU countries. Exploiting country-level heterogeneity in the implementation of European Banking Union directives allows us to control for confounders and identify effects. Our results show that these regulatory reforms aimed at increasing financial system resilience affected households heterogeneously. More stringent regulation reduces income growth for low-income households due to employment exits. Yet it tends to increase growth rates at the top of the distribution both for employee and self-employed income.

Keywords: distributional effects; EU-SILC microdata; financial regulation; income inequality (search for similar items in EconPapers)
JEL-codes: D31 G21 G28 G50 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ban, nep-eec, nep-fdg and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:281193

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