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Inequality and credit growth in Russian regions


  • Makram El-Shagi

    (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)

  • Jarko Fidrmuc

    () (Zeppelin University, Friedrichshafen, Germany)

  • Steven Yamarik

    (California State University Long Beach, CA)


We test the Rajan hypothesis using data for 75 highly heterogeneous Russian regions between the Russian crisis and the introduction of international sanctions (2000-2012). Applying static as well as dynamic panel data models, we show that a rise in income inequality measured by regional Gini indices is significantly correlated with the growth of personal loans. Thus, the rising inequality in Russia is likely to have implications on financial staiblity and occurrence of banking crises. Moreover, the correlation of inequality and corporate loans indicates that inequality affects loans growth across more channels than those implied by the Rajan hypothesis.

Suggested Citation

  • Makram El-Shagi & Jarko Fidrmuc & Steven Yamarik, 2019. "Inequality and credit growth in Russian regions," CFDS Discussion Paper Series 2019/6, Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China.
  • Handle: RePEc:fds:dpaper:201906

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    More about this item


    Income inequality; bank loans; Rajan hypothesis; Russia;

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G01 - Financial Economics - - General - - - Financial Crises
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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