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Does more finance mean more inequality in times of crisis ?

Author

Listed:
  • Clément Mathonnat

    (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Benjamin Williams

    (UCA - Université Clermont Auvergne)

Abstract

Many recent empirical studies show that both banking crises and financial development (FD) play an important role in understanding the dynamics of income inequality (IncI) over the last decades. However, so far no study has investigated the role of FD in the amplification of IncI following banking crises. This paper seeks to address this issue based on a sample of 69 banking crises in 54 countries over the 1977-2013 period. Our analysis suggests that FD is associated with a significant increase in IncI in the aftermath of banking crises. This result is robust to a broad range of alternative specifications and is unaffected by various potential sources of endogeneity. We also show that the relationship between FD and the redistributive consequences of banking crises is not subject to a threshold effect and is stronger for developing countries.

Suggested Citation

  • Clément Mathonnat & Benjamin Williams, 2020. "Does more finance mean more inequality in times of crisis ?," Post-Print hal-03165343, HAL.
    • Handle: RePEc:hal:journl:hal-03165343
    DOI: 10.1016/j.ecosys.2020.100818
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-03165343
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    Cited by:

    1. Shchepeleva, Maria & Stolbov, Mikhail & Weill, Laurent, 2022. "Has the Global Financial Crisis increased wealth inequality?," International Economics, Elsevier, vol. 169(C), pages 148-160.

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