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Importance of Access to Finance in Reducing Income Inequality and Poverty Level

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  • Kwangbin Bae
  • Dongsook Han
  • Hosung Sohn

Abstract

This study investigates the relationship between access to finance, and poverty and income inequality. We first define access to finance and identify various measurements of access to finance. Next, we examine previous analyses on the impacts of access to finance. Finally, using state-level panel data of the United States, fixed effect estimation is conducted to analyze the impact of access to finance on income inequality and poverty level. Our analysis is the first study to utilize state-level data on access to finance. The results show that access to finance has positive effects in reducing income inequality and the poverty ratio.

Suggested Citation

  • Kwangbin Bae & Dongsook Han & Hosung Sohn, 2012. "Importance of Access to Finance in Reducing Income Inequality and Poverty Level," International Review of Public Administration, Taylor & Francis Journals, vol. 17(1), pages 55-77, April.
    • Handle: RePEc:taf:rrpaxx:v:17:y:2012:i:1:p:55-77
    DOI: 10.1080/12264431.2012.10805217
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    References listed on IDEAS

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    1. Clarke, George & Xu, Lixin Colin & Zou, Heng-fu, 2003. "Finance and income inequality : test of alternative theories," Policy Research Working Paper Series 2984, The World Bank.
    2. Patrick Honohan, 2004. "Financial Sector Policy and the Poor : Selected Findings and Issues," World Bank Publications - Books, The World Bank Group, number 14874, December.
    3. Beck, Thorsten & Levine, Ross & Levkov, Alexey, 2007. "Big bad banks ? the impact of U.S. branch deregulation on income distribution," Policy Research Working Paper Series 4330, The World Bank.
    4. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2007. "Finance, inequality and the poor," Journal of Economic Growth, Springer, vol. 12(1), pages 27-49, March.
    5. Honohan, Patrick, 2008. "Cross-country variation in household access to financial services," Journal of Banking & Finance, Elsevier, vol. 32(11), pages 2493-2500, November.
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