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The effect of financial deepening on inequality: Some international evidence

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  • Hamori, Shigeyuki
  • Hashiguchi, Yoshihiro

Abstract

This paper uses an unbalanced panel data analysis of 126 countries for the period 1963–2002 to analyze the effects of financial deepening on inequality. The principal findings can be summarized as follows: (1) financial deepening reduces inequality; (2) economic growth reduces the equalizing effects of financial deepening; (3) inequality increases with an increase in trade openness; (4) the disequalizing effects of trade openness decrease as a country grows; (5) financial deepening and trade openness therefore have asymmetric effects on inequality; and (6) these effects are robust to the choice of financial variables, inequality measures, and model specifications.

Suggested Citation

  • Hamori, Shigeyuki & Hashiguchi, Yoshihiro, 2012. "The effect of financial deepening on inequality: Some international evidence," Journal of Asian Economics, Elsevier, vol. 23(4), pages 353-359.
    • Handle: RePEc:eee:asieco:v:23:y:2012:i:4:p:353-359
    DOI: 10.1016/j.asieco.2011.12.001
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    More about this item

    Keywords

    Financial deepening; Inequality; Equalizing effect; Dynamic GMM;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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