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Finance and Inequality
Author:
Mr. Martin Cihak
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https://orcid.org/0000-0002-3571-9707
and
Ms. Ratna Sahay
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Series:
Staff Discussion Notes
Volume/Issue:
Volume 2020: Issue 001
Language:
English
Publication Date:
17 Jan 2020
DOI:
https://doi.org/10.5089/9781513526546.006
ISBN:
9781513526546
ISSN:
2617-6750
Pages:
50
Keywords:
SDN; income; Gini coefficient; financial system; market Gini index; banking; financial depth; financial inclusion; financial stability; economic inequality; income inequality; quintile income share; income spectrum; credit market; return on assets; Income inequality; Income distribution; Financial sector; Global
Legal-disclaimer:
Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate.The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
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The study examines empirical relationships between income inequality and three features of finance: depth (financial sector size relative to the economy), inclusion (access to and use of financial services by individuals and firms), and stability (absence of financial distress). Using new data covering a wide range of countries, the analysis finds that the financial sector can play a role in reducing inequality, complementing redistributive fiscal policy. By expanding the provision of financial services to low-income households and small businesses, it can serve as a powerful lever in helping create a more inclusive society but—if not well managed—it can amplify inequalities.
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Cover Staff Discussion Notes
Staff Discussion Notes
ISSN:
2617-6750
Publisher:
International Monetary Fund
Volume 2020: Issue 001