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Banking sector crises and inequality

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  • Honohan, Patrick

Abstract

An apparent temporary narrowing of income inequality has been observed during several recent banking crises. But it would be a mistake to conclude that such crises don't matter for the poor. For one thing, the correlation is not strong, and the opposite pattern has also been present. Besides, the poor are much less able to absorb a cut in income: safety-net policies are crucial during a downturn even if the gap between rich and poor has temporarily narrowed. More fundamentally, distributional shifts during the crisis may be less important than the fact that underlying financial policy and infrastructures conducive to crisis can also be associated with more unequal societies.

Suggested Citation

  • Honohan, Patrick, 2005. "Banking sector crises and inequality," Policy Research Working Paper Series 3659, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3659
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    References listed on IDEAS

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    3. repec:fth:michin:446 is not listed on IDEAS
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    Cited by:

    1. Gimet, Céline & Lagoarde-Segot, Thomas, 2011. "A closer look at financial development and income distribution," Journal of Banking & Finance, Elsevier, vol. 35(7), pages 1698-1713, July.
    2. Nancy Birdsall, 2006. "Stormy Days on an Open Field: Asymmetries in the Global Economy," Working Papers 81, Center for Global Development.

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