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Not all credit is created equal: The financialization-inequality nexus in terms of government debt, corporate credit, and household credit

Author

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  • Kilinc, Mustafa
  • Kilinc, Zeynel Abidin

Abstract

This paper examines the financialization-inequality relationship for a sample of 40 advanced and developing countries covering the 1960–2020 period. The empirical results indicate that government debt and household credit are associated with higher inequality, whereas corporate credit does not have statistically significant effects. In addition, the impact of household credit is stronger in developing countries than in advanced countries. The results show that the impact of household credit on inequality follows a hump-shaped pattern as the peak effect takes place after three-to-five years. Additional analysis shows that higher household and government debt levels are associated with higher income shares of the top 10 % and lower-income shares of the bottom 50 %. Overall, the paper contributes to the relevant literature by differentiating the effects of credit types, documenting cross-country heterogeneities, and identifying dynamic impacts.

Suggested Citation

  • Kilinc, Mustafa & Kilinc, Zeynel Abidin, 2026. "Not all credit is created equal: The financialization-inequality nexus in terms of government debt, corporate credit, and household credit," Economic Systems, Elsevier, vol. 50(2).
    • Handle: RePEc:eee:ecosys:v:50:y:2026:i:2:s0939362525000688
    DOI: 10.1016/j.ecosys.2025.101356
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    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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