Finance and Inequality

Author/Editor:

Martin Cihak ; Ratna Sahay

Publication Date:

January 17, 2020

Electronic Access:

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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.

Series:

Staff Discussion Notes No. 20/01

Subject:

English

Publication Date:

January 17, 2020

ISBN/ISSN:

9781513526546/2617-6750

Stock No:

SDNEA2020001

Format:

Paper

Pages:

50

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