THE IMPACT OF FINANCIAL SYSTEM DEVELOPMENT ON INCOME INEQUALITY
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2020-08-28
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fr
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Against a background of rising income inequality within countries across the world, this thesis empirically studies the effect of financial development on income inequality whilst distinguishing between bank-based and market-based financial systems. Conducting a fixed effects analysis on an unbalanced panel of 72 countries over the period of 1990-2017, the data shows that more financial development decreases income inequality up to a certain threshold, after which it starts to rise again. However, this relationship becomes apparent only when looking at a subsample of 36 OECD countries. When it comes to market-based financial development, no clear relationship is found with income inequality. These findings are robust to alternative measurement as well as the addition of a previously neglected control variable for the welfare state.
Keywords: Financial Development, Income Inequality, Financial System, Market-based, Bank-based, Welfare State, Social Security
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Faculteit der Managementwetenschappen