Does income inequality contribute to credit cycles?
AbstractRecent literature has presented arguments linking income inequality on the financial crash of 2007 - 2009. One proposed channel is expected to work through bank credit. We analyze the relationship between income inequality and bank credit in panel cointegration framework, and find that they have a long-run dependency relationship. Results show that income inequality has contributed to the increase of bank credit in developed economies after the Second World War.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 52831.
Date of creation: Apr 2014
Date of revision:
top 1% income share; bank loans; cointegration;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-05-04 (All new papers)
- NEP-BAN-2014-05-04 (Banking)
- NEP-PBE-2014-05-04 (Public Economics)
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