Finance and Income Inequality: What Do the Data Tell Us?

Clarke, George R. G.; Xu, Lixin Colin; Zou, Heng-Fu

doi:10.2307/20111834

Cited by 336 publications

(312 citation statements)

References 7 publications

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“…Their sample consists of 65 countries over the period . Using a similar model for a larger group of countries (83) but a shorter sample period , Clarke et al (2006) also find that financial development reduces inequality. Kappel (2010), who uses a sample of 59 countries for a cross-country analysis and 78 countries for a panel analysis over the period 1960 to 2006, concludes that financial development reduces income inequality for high-income countries, but is not significant for low-income countries.…”

Section: Literature Reviewmentioning

confidence: 75%

Finance and income inequality: A review and new evidence

Haan

Sturm

2017

European Journal of Political Economy

326

148

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 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. Terms of use: Documents in EconStor mayJEL-Codes: D310, D630, F020, O110, O150.

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Section: Literature Reviewmentioning

confidence: 75%

Finance and income inequality: A review and new evidence

Haan

Sturm

2017

European Journal of Political Economy

326

148

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“…Several related studies using panel data or cross-country data, such as Li et al (1998), Clarke et al (2006), and Beck et al (2007), have empirically demonstrated that as the financial sector fully develops, income inequality decreases. No previous study, however, has examined the effect of financial integration on the relationship between financial development and inequality.…”

Section: Introductionmentioning

confidence: 99%

Finance and Inequality: How Does Globalization Change Their Relationship?

2013

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This research demonstrates that international financial integration changes the way in which financial development affects inequality within a country. Specifically, both the cross-country analysis and the dynamic panel data analysis using data collected from more than 100 countries provide evidence indicating that if the financial market of a country is highly open to the world market, financial development widens inequality within that country, whereas if the financial market of a country is highly closed to the world market, financial development narrows inequality within that country. Our theoretical framework provides a possible explanation for our empirical findings.

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“…In this context, Clarke et al (2006) identify three distinct hypotheses that are dominant in the literature: the "inequality-widening hypothesis", the "inequality-narrowing hypothesis" carried by Galor and Zeira (1993) and Banerjee and Newman (1993) and the "inverted-Uhypothesis" by Greenwood and Jovanovic (1990).…”

Section: Figure 1 Financial Development Economic Growth Inequalitymentioning

confidence: 99%

Finance and Inequality – Evidence from East Asia

Mansour¹,

Wendel²

2015

EJEF

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The economic debate about inequality has occupied a huge place in the scientific discourse of the last decades. Several factors have been identified as causes for the rising wealth and income inequality in various regions such as economic growth, capital return and intergenerational wealth. In this paper, East Asia is chosen as a regional focus for the analysis due to the region's specific characteristics and history regarding inequality. Until the end of the 1980s, the region experienced a period of so-called "growth with equity" where high economic growth rates were associated with decreasing poverty and inequality. In recent years, however, growth in East Asia has gone hand in hand with inequality. This shift from "growth with equity" to "growth with inequality" makes the region worth investigating. The paper focuses particularly on the size of the financial sector, analyzing its role and impact on the development of inequality. Therefore, the theoretical connection and the natural relationship between poverty, inequality, economic growth as well as the size of the financial sector are discussed. Indicators, proxies and measurements for these variables are identified, based on existing literature. The main analysis delivers an answer to the research question of whether and how financial development affects the inequality in a society. For the analysis, cross-country and panel data for the ASEAN+3 countries from 1960-2012 are used.

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Finance and Income Inequality: What Do the Data Tell Us?

Cited by 336 publications

References 7 publications

Finance and income inequality: A review and new evidence

Finance and income inequality: A review and new evidence

Finance and Inequality: How Does Globalization Change Their Relationship?

Finance and Inequality – Evidence from East Asia

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