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Does income inequality contribute to credit cycles?

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  • Malinen, Tuomas

Abstract

Recent literature has presented arguments linking income inequality on the financial crash of 2007 - 2009. One proposed channel is expected to work through bank credit. We analyze the relationship between income inequality and bank credit in panel cointegration framework, and find that they have a long-run dependency relationship. Results show that income inequality has contributed to the increase of bank credit in developed economies after the Second World War.

Suggested Citation

  • Malinen, Tuomas, 2014. "Does income inequality contribute to credit cycles?," MPRA Paper 52831, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:52831
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    Cited by:

    1. repec:eee:quaeco:v:64:y:2017:i:c:p:67-81 is not listed on IDEAS
    2. Glennie Lauren Moore & Engelbert Stockhammer, 2018. "The drivers of household indebtedness re-considered: an empirical evaluation of competing arguments on the macroeconomic determinants of household indebtedness in OECD countries," Working Papers PKWP1803, Post Keynesian Economics Society (PKES).
    3. Stockhammer, Engelbert & Wildauer, Rafael, 2017. "Expenditure cascades, low interest rates or property booms? Determinants of household debt in OECD countries," Greenwich Papers in Political Economy 18276, University of Greenwich, Greenwich Political Economy Research Centre.
    4. Jan Behringer & Sabine Stephan & Thomas Theobald, 2017. "Macroeconomic factors behind financial instability," IMK Working Paper 178-2017, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    Keywords

    top 1% income share; bank loans; cointegration;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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