Abstract:We investigate the link between financial integration and income inequality, suggesting that different channels of financial integration have contrasting distributional effects. Using an unbalanced panel of 65 countries from 1992 to 2015 and employing dynamic panel data methods, we find that greater financial integration through debt‐creating capital increases income inequality compared to equity‐type capital. Furthermore, a larger share of direct investment in financial integration is associated with lower in… Show more
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