The Effects of Financial Development on Income Inequality and Poverty

CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 10/127

40 Pages Posted: 7 Apr 2010

See all articles by Vivien Kappel

Vivien Kappel

affiliation not provided to SSRN

Date Written: March 2010

Abstract

This paper examines the effects of financial development on income inequality and poverty. The results of both cross-country and panel data regressions suggest that inequality and poverty are reduced not only through enhanced loan markets, but also through more developed stock markets. We show that ethnic diversity and the distribution of land are significant and robust determinants of both income inequality and poverty. Finally, we find evidence that government spending leads to a reduction in income inequality in high income countries. In low income countries, however, we find no significant effect.

Keywords: Financial development, inequality, poverty

JEL Classification: O16, G20

Suggested Citation

Kappel, Vivien, The Effects of Financial Development on Income Inequality and Poverty (March 2010). CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 10/127. Available at SSRN: https://ssrn.com/abstract=1585148 or http://dx.doi.org/10.2139/ssrn.1585148

Vivien Kappel (Contact Author)

affiliation not provided to SSRN ( email )

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