Finance and Income Inequality : Test of Alternative Theories
Although theoretical models make distinct predictions about the relationship between financial sector development and income inequality, little empirical research has been conducted to compare their relative explanatory power. The authors examine the relation between financial intermediary development and income inequality in a panel data set of 91 countries for the period 1960-95. Their results provide evidence that inequality decreases as economies develop their financial intermediaries, consistent with the theoretical models in Galor and Zeira (1993) and Banerjee and Newman (1993). Moreover, consistent with the insight of Kuznets, the relation between the Gini coefficient and financial intermediary development appears to depend on the sectoral structure of the economy: a larger modern sector is associated with a smaller drop in the Gini coefficient for the same level of financial intermediary development. But there is no evidence of an inverted-U-shaped relation between financial sector development and income inequality, as suggested by Greenwood and Jovanovic (1990). The results are robust to controlling for biases introduced by simultaneity
Year of publication: |
2003
|
---|---|
Authors: | Clarke, George ; Xu, Lixin Colin ; Zou, Heng-fu |
Publisher: |
2003: World Bank, Washington, DC |
Saved in:
freely available
Extent: | 1 Online-Ressource |
---|---|
Series: | Policy Research Working Paper ; No. 2984 |
Type of publication: | Book / Working Paper |
Notes: | English en_US |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012573187
Saved in favorites
Similar items by person
-
Finance and income inequality : what do the data tell us?
Clarke, George R. G., (2006)
-
Finance and income inequality: test of alternative theories
Clarke, George R. G., (2003)
-
Finance and Income Inequality: Test of Alternative Theories
Clarke, George, (2003)
- More ...