Finance and Income Inequality: A Review and New Evidence

By Jakob de Haan, Jan-Egbert Sturm. Social Science Research Network, 2017

440 citations recorded by the source corpus.

Using a panel fixed effects model for a sample of 121 countries covering 1975-2005, we examine how financial development, financial liberalization and banking crises are related to income inequality. In contrast with most previous work, our results suggest that all finance variables increase income inequality. The level of financial development conditions the impact of financial liberalization on inequality. Also the quality of political institutions conditions the impact of financial liberalization on income inequality, in contrast to the quality of economic institutions. Our main findings are robust for using random effects, cross-country regressions and legal origin as instrument for financial development.

Subfields: Economics and Econometrics, Finance, Information Systems

View Paper: https://www.semanticscholar.org/paper/9881e7f04e0905018f1be66c5ca9d1e00c010df0

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. V. Murinde
2. V. Marisetty
3. Philipp Heimberger
4. Sonali Jain-Chandra
5. Vanesa Pesqué-Cela
6. Yener Altunbaş
7. Ayşegül Demir
8. Rui Mano

In Finance

1. V. Murinde
2. V. Marisetty
3. Philipp Heimberger
4. Vanesa Pesqué-Cela
5. Yener Altunbaş
6. Ayşegül Demir
7. Rui Mano
8. Sefa Awaworyi Churchill

In Information Systems

1. V. Murinde
2. Philipp Heimberger
3. Vanesa Pesqué-Cela
4. Yener Altunbaş
5. Ayşegül Demir
6. Philippe Wingender

Citations in the corpus

• The distributional effects of capital account liberalization (2018, background): “On the other hand, financial crises associated with long-lasting recessions may disproportionately hurt the poor and hence increase inequality (de Haan and Sturm, 2016).1 1 The empirical evidence on the effect of financial crises on inequality is mixed.”
• Does economic globalisation affect income inequality? A meta‐analysis (2020, background): “Based on a large pool of independent estimations (e.g. Reuveny and Li 2003; Jaumotte et al. 2013; de Haan and Sturm 2017) and qualitative reviews (e.g. Anderson 2005; Goldberg and Pavcnik 2007; Harrison et al. 2011), previous literature has been unable to establish conclusively whether…”
• CENTRAL BANK POLICIES AND INCOME AND WEALTH INEQUALITY: A SURVEY (2019, neutral): “…et al. , 2013; Dabla-Norris et al. , 2015), capital account liberalization (Furceri and Loungani, 2017), the growth and liberalization of the financial sector (de Haan and Sturm, 2017), labor market institutions (Jaumotte and Osorio Buitron, 2015) and macro-economic adjustments (Ag´enor, 2004).”
• Financial inclusion and poverty: a tale of forty-five thousand households (2020, background): “…has sought to empirically examine the impact of finance on income distribution on the one hand (see, e.g. Ang 2010; Clarke, Xu, and Zou 2006; de Haan and Sturm 2017; Shahbaz, Bhattacharya, and Mahalik 2017), and on the other hand, on poverty (see, e.g. Akhter and Daly 2009; Beck et al. 2008;…”
• Fintech, financial inclusion and income inequality: a quantile regression approach (2020, methodology): “…relates to the relationship between finance and income inequality (e.g. Beck, Demirgüç-Kunt, and Levine 2007; Dabla-Norris et al. 2015b; De Haan and Sturm 2017; Park and Mercado2018 ) and attempts to explore channels through which new changes in financial instruments, institutions and markets may…”
• Inequality in China – Trends, Drivers and Policy Remedies (2018, background): “Lower global funding costs could lead to greater availability of domestic credit which has been shown to be another driver of inequality (de Haan and Sturm, 2016).”