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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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    Cited by:

    1. Ho, Sin-Yu & Njindan Iyke, Bernard, 2017. "Does Financial Development Lead to Poverty Reduction in China? Time Series Evidence," MPRA Paper 78922, University Library of Munich, Germany.
    2. repec:eee:deveco:v:130:y:2018:i:c:p:113-126 is not listed on IDEAS
    3. Sebastian Jauch & Sebastian Watzka, 2016. "Financial development and income inequality: a panel data approach," Empirical Economics, Springer, vol. 51(1), pages 291-314, August.
    4. Jakob de Haan & Jan-Egbert Sturm, 2016. "Finance and income inequality: A review and new evidence," KOF Working papers 16-410, KOF Swiss Economic Institute, ETH Zurich.
    5. Irwan Trinugroho & Agusman Agusman & Mochammad Doddy Ariefianto & Darsono Darsono & Amine Tarazi, 2015. "Determinants of cross regional disparity in financial deepening: Evidence from Indonesian provinces," Economics Bulletin, AccessEcon, vol. 35(2), pages 896-910.
    6. Muhammad Shahbaz & Nanthakumar Loganathan & Aviral Tiwari & Reza Sherafatian-Jahromi, 2015. "Financial Development and Income Inequality: Is There Any Financial Kuznets Curve in Iran?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(2), pages 357-382, November.
    7. Madhu Sehrawat & A. K. Giri, 2016. "Financial development, poverty and rural-urban income inequality: evidence from South Asian countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(2), pages 577-590, March.
    8. repec:agr:journl:v:1(614):y:2018:i:1(614):p:95-112 is not listed on IDEAS
    9. Sturm, Jan-Egbert & De Haan, Jakob, 2016. "Finance and income inequality revisited," Annual Conference 2016 (Augsburg): Demographic Change 145660, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Financial deepening; Inequality; Equalizing effect; Dynamic GMM;

    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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