Article Dans Une Revue Journal of banking & finance = Journal of banking and finance Année : 2011

A closer look at financial development and income distribution

Résumé

This paper analyzes the under-investigated relationship uniting financial development and income distribution. We use a novel approach taking into account for the first time the specific channels linking banks, capital markets and income inequality, the time-varying nature of the relationship, and reciprocal causality. We construct a set of annual indicators of banking and capital market size, robustness, efficiency and international integration. We then estimate the determinants of income distribution using a panel Bayesian structural vector autoregressive (SVAR) model, for a set of 49 countries over the 1994-2002 period. We uncover a significant causality running from financial sector development to income distribution. In addition, the banking sector seems to exert a stronger impact on inequality. Finally, the relationship appears to depend on characteristics of the financial sector, rather than on its size.

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halshs-00564641 , version 1 (09-02-2011)

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Céline Gimet, Thomas Lagoarde-Segot. A closer look at financial development and income distribution. Journal of banking & finance = Journal of banking and finance, 2011, 35 (7), pp.1698-1713. ⟨10.1016/j.jbankfin.2010.11.011⟩. ⟨halshs-00564641⟩
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