Finance and Inequality

January 17, 2020

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Martin Cihak, and Ratna Sahay. Finance and Inequality, (USA: International Monetary Fund, 2020) accessed November 14, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

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.

Subject: Economic sectors, Financial inclusion, Financial markets, Financial sector, Financial services, Income distribution, Income inequality, National accounts

Keywords: Banking, Credit market, Economic inequality, Financial depth, Financial inclusion, Financial sector, Financial stability, Financial system, Gini coefficient, Global, Income, Income distribution, Income inequality, Income inequality, Income spectrum, Market Gini index, Quintile income share, Return on assets, SDN

Publication Details

Pages:

50
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2020/001
Stock No:

SDNEA2020001
ISBN:

9781513526546
ISSN:

2617-6750

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