Finance and Inequality

Author/Editor:

Martin Cihak ; Ratna Sahay

Publication Date:

January 17, 2020

Electronic Access:

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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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