Bank Regulations and Income Inequality: Empirical Evidence

49 Pages Posted: 14 Nov 2017 Last revised: 18 Nov 2021

See all articles by Manthos D. Delis

Manthos D. Delis

Audencia Business School

Iftekhar Hasan

Fordham University ; Bank of Finland; University of Sydney

Pantelis Kazakis

University of Glasgow - Adam Smith Business School

Multiple version iconThere are 2 versions of this paper

Date Written: April 20, 2012


This paper provides cross-country evidence that variations in bank regulatory policies result in differences in income distribution. In particular, the overall liberalization of banking systems decreases the Gini coefficient and the Theil index significantly. However, this effect fades away for countries with low levels of economic and institutional development and for market-based economies. Among the different liberalization policies, the most significant negative effect on inequality is that of credit controls, which also seem to have a lasting effect on the Gini coefficient. Banking supervision and the abolition of interest rate controls also have a negative yet short-run impact on income inequality. A notable finding is that liberalization of securities markets increases income inequality substantially and over a long time span, suggesting that securitization widens the distribution of income. We contend that these findings have new implications for the effects of bank regulations, besides those related to their impact on financial stability. Keywords: Bank regulations; Income inequality; Cross-country panel data; Instrumental variables; Panel VAR JEL classification: G28; O15; O16

JEL Classification: G28, O15, O16

Suggested Citation

Delis, Manthos D. and Hasan, Iftekhar and Kazakis, Pantelis, Bank Regulations and Income Inequality: Empirical Evidence (April 20, 2012). Bank of Finland Research Discussion Paper No. 18/2012, Available at SSRN:

Manthos D. Delis (Contact Author)

Audencia Business School ( email )

8 Road Joneliere
BP 31222
Nantes Cedex 3, 44312

Iftekhar Hasan

Fordham University ( email )

NEW YORK, NY 10023
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101

University of Sydney ( email )

P.O. Box H58
Sydney, NSW 2006

Pantelis Kazakis

University of Glasgow - Adam Smith Business School ( email )

Adam Smith Business School
Gilbert Scott Building
Glasgow, Scotland G12 8QQ
United Kingdom


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