The impact of finance on income inequality: A threshold analysis

John Thornton; Chrysoivalantis Vasilakis

doi:10.17811/ebl.13.2.2024.104-111

The impact of finance on income inequality: A threshold analysis

John Thornton, Chrysoivalantis Vasilakis

Norwich Business School

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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 language	English
Pages (from-to)	104-111
Number of pages	8
Journal	Economics and Business Letters
Volume	13
Issue number	2
DOIs	https://doi.org/10.17811/ebl.13.2.2024.104-111
Publication status	Published - 22 May 2024

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10.17811/ebl.13.2.2024.104-111Licence: CC BY-NC-ND

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Cite this

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AB - 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’.

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