Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202284 
Year of Publication: 
2017
Series/Report no.: 
JRC Working Papers in Economics and Finance No. 2017/6
Publisher: 
Publications Office of the European Union, Luxembourg
Abstract: 
The influence of financial deepening on income inequality in developed economies is studied with particular interest in the European Union member states that have large penetration of bank credit. Building on the model of financially open economies (Kunieda et al, 2014) and extending its implications for the top-income shares, it is shown that a simultaneous increase in private bank credit relative to the gross domestic product (GDP) and the gap between real interest rate and GDP growth rate increases inequality, as measured by both the Gini index and the top-income shares. To establish the effect on the top-income shares, a simultaneous estimation procedure is proposed that exploits the implications of the fact that a higher income range is well-characterized by the Pareto distribution.
Subjects: 
credit
financial deepening
European Union
income inequality
JEL: 
D31
E51
G21
O16
O41
Persistent Identifier of the first edition: 
ISBN: 
978-92-79-67443-3
Document Type: 
Working Paper

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