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The rich, the poor, and the middle class: banking crises and income distribution

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Abstract

How do banking crises a ect rich, middle-class and poor households? This paper quanti es the distributional implications of banking crises for a panel of 140 economies over the 1970-2017 period. We rely on di erent empirical settings, including an instrumental variable approach, that exploit the geographical di usion of banking crises across borders. Our results show that banking crises systematically reduce the income share of rich households and positively a ect middle-class households. We also nd that income inequality increases during periods preceding the triggering of a banking crisis.

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  • Mehdi El Herradi & Aurélien Leroy, 2021. "The rich, the poor, and the middle class: banking crises and income distribution," AMSE Working Papers 2136, Aix-Marseille School of Economics, France.
    • Handle: RePEc:aim:wpaimx:2136
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    More about this item

    Keywords

    banking crises; income distribution; Inequality;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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