Finance-inequality nexus: the long and the short of it

Makhlouf, Y. ORCID: 0000-0001-7737-3153, Kellard, N.M. and Vinogradov, D.V., 2020. Finance-inequality nexus: the long and the short of it. Economic Inquiry, 58 (4), pp. 1977-1994. ISSN 0095-2583

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Financial development affects income inequality differently in the short and in the long term. Investigating OECD countries from 1870–2011, we find in the short run, an improvement in financial development tends to reduce inequality, while in the long run, more finance contributes to more inequality. The short‐run effect concurs with theories advocating financial development increases the availability of financial services, primarily for the poor. However, this effect becomes nil within a few years. Results thus imply that policies aimed at reducing inequality through improving access of the poor to finance need to be carefully designed to ensure longevity of impact.

Item Type: Journal article
Publication Title: Economic Inquiry
Creators: Makhlouf, Y., Kellard, N.M. and Vinogradov, D.V.
Publisher: Wiley
Date: October 2020
Volume: 58
Number: 4
ISSN: 0095-2583
Rights: © 2020 the authors. Economic Inquiry published by Wiley Periodicals LLC on behalf of Western Economic Association International. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Divisions: Schools > Nottingham Business School
Record created by: Linda Sullivan
Date Added: 29 May 2020 08:27
Last Modified: 31 May 2021 15:15

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