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Curse or blessing? The effect of inequality on financial development

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  • Yin-Fang Zhang
  • Antonio Savoia
  • Kunal Sen

Abstract

An important feature of the process of transformation in developing economies is the depth and outreach of their capital and credit markets, i.e. financial development. As this is often considered crucial to support growth and poverty reduction, it is important to understand what structural factors drive it. The literature so far has assessed the role of historical, political, cultural, and institutional determinants, but has not yet adequately investigated the role of inequality. This paper addresses this lacuna by empirically investigating its effects.

Suggested Citation

  • Yin-Fang Zhang & Antonio Savoia & Kunal Sen, 2025. "Curse or blessing? The effect of inequality on financial development," WIDER Working Paper Series wp-2025-59, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2025-59
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    References listed on IDEAS

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    5. Meschi, Elena & Vivarelli, Marco, 2009. "Trade and Income Inequality in Developing Countries," World Development, Elsevier, vol. 37(2), pages 287-302, February.
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