## Finance and Inequality

_Staff Discussion Notes, January 17, 2020_

## Source details

**Canonical URL:** [Finance and Inequality](https://www.imf.org/en/publications/staff-discussion-notes/issues/2020/01/16/finance-and-inequality-45129)

## Other formats

- [Markdown version](/en/publications/staff-discussion-notes/issues/2020/01/16/finance-and-inequality-45129/index.md)
- [Structured JSON version](/en/publications/staff-discussion-notes/issues/2020/01/16/finance-and-inequality-45129/index.json)
- [Bundle manifest](/en/publications/staff-discussion-notes/issues/2020/01/16/finance-and-inequality-45129/bundle-manifest.json)

## Bibliographic details
- Authors: Martin Cihak, Ratna Sahay
- Published: January 17, 2020
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781513526546.006

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### Summary and main findings
- 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.
- Expanding the provision of financial services to low-income households and small businesses can serve as a powerful lever to help create a more inclusive society.
- If not well managed, the financial sector can amplify inequalities.

### Data, scope, and terminology
- Features analyzed: financial depth, financial inclusion, financial stability.
- Key terminology preserved from the source: Gini coefficient, market Gini index, quintile income share, return on assets.
- Coverage: "new data covering a wide range of countries" (as described in the source).

### Policy implications and interpretation
- Finance can complement redistributive fiscal policy in reducing income inequality.
- Policies that expand access to and use of financial services by low-income households and small businesses are highlighted as mechanisms to promote inclusion.
- The analysis cautions that inadequate management of financial sector expansion can amplify inequalities, implying the need for stability-focused regulation alongside inclusion efforts.

### Key publication metadata and identifiers
- Authors: Martin Cihak, Ratna Sahay
- Publication date: January 17, 2020
- Series: Staff Discussion Notes No. 2020/001
- Issue: 001
- Volume: 2020
- Pages: 50
- DOI: https://doi.org/10.5089/9781513526546.006
- ISBN: 9781513526546
- ISSN: 2617-6750

*Staff Discussion Note: "Finance and Inequality" by Martin Cihak and Ratna Sahay (January 17, 2020).*

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## Content in this bundle

- **Staff Discussion Note**
  - [Staff Discussion Note (Markdown version)](/-/media/files/publications/sdn/2020/english/sdnea2020001.pdf.md){rel="alternate" type="text/markdown"}
  - [Staff Discussion Note (PDF)](/-/media/files/publications/sdn/2020/english/sdnea2020001.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/staff-discussion-notes/issues/2020/01/16/finance-and-inequality-45129_