Finance and inequality: Channels and evidence

Claessens, Stijn; Perotti, Enrico

doi:10.1016/j.jce.2007.07.002

Cited by 414 publications

(200 citation statements)

References 138 publications

(110 reference statements)

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“…This result agrees with the finance-income inequality widening hypothesis reported in Banerjee and Newman (1993), Dollar and Kraay (2002), Behrman et al (2003), Beck et al (2004). In the early stages of financial development, the poor segments of the population may find it difficult to access credit from the financial institutions due to their lack of collateral and financial illiteracy, which render them unworthy of credit as shown by Perotti (1996), Claessens (2006) and Claessens and Perotti (2007). Thus, better income distribution for the economy is becoming a more and more distant dream in the presence of greater financial development.…”

Section: Discussion On Long-run Estimatessupporting

confidence: 90%

“…For example, Dollar and Kraay (2002), Behrman et al (2003) and Beck et al (2004) argue that in the early stages of financial development, the poor segments of the population may find it difficult to access credit from the financial institutions due to lack of financial literacy. Perotti (1996), Claessens (2006) and Claessens and Perotti (2007) and others have also shown that the formal financial sector do not provide loans to the poor due to their low education level. In such circumstances, poor individuals are unable to leave the cycle of income inequality, and eventually income inequality intensifies.…”

Section: Finance-growth-income Inequalitymentioning

confidence: 99%

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Finance and income inequality in Kazakhstan: evidence since transition with policy suggestions

2017

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Kazakhstan gained independence in 1990 and has undergone significant changes in economic, social and trade conditions since then. We analyse the effects of financial development on income inequality in Kazakhstan, incorporating economic growth, foreign investment, education and the role of democracy as the drivers. We establish that income inequality in Kazakhstan is impaired by financial development. In summary, we send the three messages for policy purposes. First, strengthening financial sector is necessary to close the gap between 'haves and have-nots'. Second, attracting foreign direct investment beyond the hydrocarbon sector is necessary to alleviate inequality. Finally, adaptation of education system to the new social and economic environment would help in improving income distribution.

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Section: Discussion On Long-run Estimatessupporting

confidence: 90%

Section: Finance-growth-income Inequalitymentioning

confidence: 99%

Finance and income inequality in Kazakhstan: evidence since transition with policy suggestions

2017

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“…The importance of the finance-inequality relationship has recently been highlighted in an insightful survey article by Claessens and Perotti (2007). They indicate that while financial development can help reduce income inequality, financial liberalization captured by established interests may do the opposite.…”

Section: Introductionmentioning

confidence: 99%

“…In sum, financial sector reforms may lead to well-connected elites capturing most of the gains from new opportunities (Rajan and Zingales, 2003a, b;Claessens and Perotti, 2007). Therefore, the presence of these established interests may deepen rather than broaden access to finance, resulting in higher income inequality.…”

mentioning

confidence: 99%

Finance and Inequality: The Case of India

Ang

2010

Southern Economic Journal

202

107

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ABSTRACT:Although theory emphasizes the role of financial market frictions in explaining income inequality, there is little empirical research exploring how financial development and financial sector reforms influence the evolution of income inequality. This paper examines how finance impacts on income inequality in India using annual time series data for over half a century. The results indicate that while financial development helps reduce income inequality, financial liberalization seems to have exacerbated income inequality in India. Our results are robust to the use of different measures for financial development and financial liberalization.

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“…Such crises hit economically weak segments of society more than the wealthy, especially in absence of adequate social safety nets and weaker government aid due to the crises (Balakrishnan et al 2013;Claessens and Perotti, 2007;Easterly et al 2001).…”

Section: Interpretation Of Resultsmentioning

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 inequality: Channels and evidence

Cited by 414 publications

References 138 publications

Finance and income inequality in Kazakhstan: evidence since transition with policy suggestions

Finance and income inequality in Kazakhstan: evidence since transition with policy suggestions

Finance and Inequality: The Case of India

Finance and Inequality – Evidence from East Asia

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