IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v159y2026ics0264999326000866.html

Financial openness and wealth inequality: The moderating role of financial development

Author

Listed:
  • Kim, Dong-Hyeon
  • Lin, Shu-Chin
  • Liu, Peiyao

Abstract

This study examines how financial openness affects wealth inequality and whether this relationship depends on financial development. Existing research has focused mainly on income inequality and provides mixed evidence, leaving the impact on wealth concentration largely unexplored. Using panel data for 104 countries from 1995 to 2022, we combine dynamic panel estimation with threshold techniques to test for nonlinear effects. The results show that financial openness increases wealth inequality in countries with low levels of financial development. However, this effect weakens and reverses as financial systems deepen beyond a critical threshold. Mechanism analysis indicates that entrepreneurship, innovation, and human capital accumulation transmit these effects. These findings suggest that the distributional consequences of financial openness depend fundamentally on domestic financial capacity, underscoring the importance of sequencing financial reforms to promote inclusive wealth accumulation.

Suggested Citation

  • Kim, Dong-Hyeon & Lin, Shu-Chin & Liu, Peiyao, 2026. "Financial openness and wealth inequality: The moderating role of financial development," Economic Modelling, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:ecmode:v:159:y:2026:i:c:s0264999326000866
    DOI: 10.1016/j.econmod.2026.107557
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264999326000866
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econmod.2026.107557?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:159:y:2026:i:c:s0264999326000866. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.