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A new approach to financial integration and market income inequality

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  • Inekwe, John Nkwoma
  • Jin, Yi
  • Valenzuela, Maria Rebecca

Abstract

Using loan contracts of firms in the syndicated loan market, we generate weighted aggregate measures of financial connections of emerging market economies and relate these financial integration indices to income inequality. The results reveal that financial integration is beneficial in reducing market income inequality, but worsens net income inequality. Financial intermediation is detrimental to net income inequality, but beneficial in lowering market income inequality. The results show that independent access to financing has no relationship with income inequality. The results are invariant using alternative income inequality indices and using external instrument against internal instrument in identifying the equations.

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  • Inekwe, John Nkwoma & Jin, Yi & Valenzuela, Maria Rebecca, 2018. "A new approach to financial integration and market income inequality," Emerging Markets Review, Elsevier, vol. 37(C), pages 134-147.
    • Handle: RePEc:eee:ememar:v:37:y:2018:i:c:p:134-147
    DOI: 10.1016/j.ememar.2018.07.002
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    More about this item

    Keywords

    Networks; Institutions; Financial integration; Income inequality; JEL; D31; F21; F36; G15;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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