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Wealth distribution and probability of bank failure across countries

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  • Jacobi, Arie
  • Tzur, Joseph

Abstract

An L-Shape distribution of wealth may be viewed as undesirable since a small percentage of the population holds most of the wealth. In this study, we estimated the Burr-XII wealth distribution parameters for 175 countries over the years 2013–2018. We conducted a simulation that shows that L-shape wealth distribution is associated with a lower probability of bank failure than that of a unimodal-shape distribution in different countries. Our study implies that an L-shape of wealth distribution is related to the stability of banks. Therefore, in future empirical studies, it is essential to include the shape of wealth distribution, amongst other factors, in explaining the different bank failure rates across countries.

Suggested Citation

  • Jacobi, Arie & Tzur, Joseph, 2021. "Wealth distribution and probability of bank failure across countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:intfin:v:71:y:2021:i:c:s104244312100010x
    DOI: 10.1016/j.intfin.2021.101291
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    1. Jacobi, Arie & Tzur, Joseph, 2021. "Wealth Distribution across Countries: Quality of Weibull, Dagum and Burr XII in Estimating Wealth over Time," Finance Research Letters, Elsevier, vol. 43(C).

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    More about this item

    Keywords

    Wealth per adult; Burr distribution XII; Bank failure; L-shape distribution; Unimodal-shape distribution; Loan-to-value ratio;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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