Availability of financial services and income inequality: The evidence from many countries

Mookerjee, Rajen; Kalipioni, Paul

doi:10.1016/j.ememar.2010.07.001

Cited by 134 publications

(77 citation statements)

References 16 publications

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“…The control variables for inequality are identified based on the literature survey. For example, greater economic development, which is proxied by GDPC, tends to improve the income distribution (Agnello et al 2012;Gimet and Lagoarde-Segot 2011;Kus* tepeli 2006;Mookerjee and Kalipioni 2010). We control for human capital or educational attainment because Downloaded by [Northwestern University] at 08:21 25 March 2015 these factors have been found to affect income inequality (Ang 2010;Beck et al 2007;Huggett et al 2006).…”

Section: The Empirical Model and Econometric Methodologymentioning

confidence: 99%

“…The poor, who do not enjoy this benefit, might find it difficult to obtain loans even when financial markets are well developed; thus, this might worsen income inequality. The inequality-narrowing hypothesis puts forward the idea that when the financial sector grows, the poor, who were previously excluded from obtaining loans, might gain access (Beck et al 2007;Clarke et al 2006;Hamori and Hashiguchi 2012;Jalil and Feridun 2011;Mookerjee and Kalipioni 2010).…”

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confidence: 99%

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Financial Development and Income Inequality at Different Levels of Institutional Quality

Law

Tan

Azman-Saini

2014

Emerging Markets Finance and Trade

141

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We examine whether the relationship between financial development and income inequality varies with levels of institutional quality. The empirical evidence based on the threshold regression approach shows that there indeed exists an institutional quality threshold effect in the relationship between financial development and income inequality. Financial development tends to reduce income inequality only after a certain threshold level of institutional quality has been achieved. Until then, the effect of financial development on income inequality is nonexistent. This finding suggests that institutional quality affects the link between financial development and income inequality, reflecting the notion that better quality finance results in more equal income distribution.

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Section: The Empirical Model and Econometric Methodologymentioning

confidence: 99%

mentioning

confidence: 99%

Financial Development and Income Inequality at Different Levels of Institutional Quality

Law

Tan

Azman-Saini

2014

Emerging Markets Finance and Trade

141

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“…() based on a dynamic panel estimation for a dataset that includes 22 African countries for the period 1990–2004. Based on standard and IV cross‐sectional regressions for 70 developing and developed countries over the period 2000–2005, Mookerjee and Kalipioni () show that greater access to bank branches reduces income inequality across countries.…”

Section: Measuring the Reverse Impact Of Finance On Inequalitymentioning

confidence: 99%

“…Using an almost identical empirical methodology and key variables definitions, Kappel (2010) reaches the same conclusion for a panel of 78 developing and developed countries for the period 1960-2006, as do Enowbi Batuo et al (2010) based on a dynamic panel estimation for a dataset that includes 22 African countries for the period 1990-2004. Based on standard and IV cross-sectional regressions for 70 developing and developed countries over the period , Mookerjee and Kalipioni (2010 show that greater access to bank branches reduces income inequality across countries.…”

Section: Financial Development and The Size Of The Financial Sectormentioning

confidence: 99%

The Circular Relationship Between Inequality, Leverage, and Financial Crises

Bazillier

Hericourt

2016

Journal of Economic Surveys

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In this paper, we put into perspective the recent literature which points to inequality as a possible cause of credit bubbles, by reintegrating it into a more general analysis on the two‐way relationship between inequality and finance. We focus more specifically on situations where high inequalities and widespread access to credit coexist, and argue that, even when institutions maintain more or less equal access to finance, there may be a dynamic, positive circular relationship between inequality and financial development. However, even if there is some evidence in the literature of a positive causal impact of inequality on credit, this does not preclude other important, cofounding factors. The conclusions concerning the distributional impact of finance are more ambiguous. A survey of the empirical literature highlights several issues that must be tackled. First, endogeneity: reverse causality and coincidental factors are major concerns. Second, the choice of consistent measurements for the key variables (both credit and inequality) has strong empirical implications, and must be grounded on relevant theoretical channels. Third, those circular dynamics have substantial policy implications for emerging economies, since an increasing number face a joint increase in inequality and credit.

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“…If it exists, we expect a positive coefficient on the linear term and a negative coefficient on the quadratic term. We also control for financial development since a well developed financial sector is likely correlated with both progressivity Li, 2007, 2009) and inequality (Mookerjee and Kalipioni, 2010;Law and Tan, 2009;Clarke, Xu and Zou, 2006). 26 In addition to reducing omitted variable bias, financial development also allows us to control for access to consumption smoothing mechanisms.…”

Section: Identification Issuesmentioning

confidence: 99%

Unequal inequalities: Do progressive taxes reduce income inequality?

Duncan

Peter

2016

Int Tax Public Finance

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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. www.econstor.eu This paper analyzes the effect of changes in structural progressivity of national income tax systems on observed and actual income inequality. Using several unique measures of progressivity over the 1981-2005 period for a large panel of countries, we find that progressivity reduces inequality in observed income, but has a significantly smaller impact on actual inequality, approximated by consumption-based GINIs. We show empirically that the differential effect on observed vs. actual inequality is much larger in countries with weaker legal institutions. Substantial differences in inequality response to changes in top vs. bottom rates are also uncovered. The paper discusses implications of these results for flat tax policies. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E S JEL Classification:H2, I3, J3, O1, O2

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Availability of financial services and income inequality: The evidence from many countries

Cited by 134 publications

References 16 publications

Financial Development and Income Inequality at Different Levels of Institutional Quality

Financial Development and Income Inequality at Different Levels of Institutional Quality

The Circular Relationship Between Inequality, Leverage, and Financial Crises

Unequal inequalities: Do progressive taxes reduce income inequality?

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