The impact of finance on income inequality: A threshold analysis

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Abstract

We identify the optimal level of financial development for income inequality in a panel of countries employing a non-linear panel Generalized Method of Moments (GMM) approach. The impact of financial development is statistically significant above and below the optimal level, but its impact on income inequality is not asymmetric, with the costs of financial ‘underdevelopment’ being greater than those for ‘over-development’.
Original languageEnglish
JournalEconomics and Business Letters
Publication statusAccepted/In press - 15 Jan 2024

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