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Finance-Inequality Nexus: the long and the short of it

Makhlouf, Yousef and Kellard, Neil and Vinogradov, Dmitri (2020) 'Finance-Inequality Nexus: the long and the short of it.' Economic Inquiry. ISSN 0095-2583

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Abstract

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: Article
Divisions: Faculty of Social Sciences > Essex Business School
Depositing User: Elements
Date Deposited: 29 Jun 2020 18:52
Last Modified: 16 Jul 2020 19:15
URI: http://repository.essex.ac.uk/id/eprint/27584

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