Financial development and income inequality, the Latin America case

Tomás Gómez Rodríguez; Humberto Ríos Bolívar; Ali Aali Bujari

doi:10.22201/FCA.24488410E.2019.1902

Financial development and income inequality, the Latin America case

Tomás Gómez Rodríguez, Humberto Ríos Bolívar, Ali Aali Bujari

Escuela Superior de Economía (ESE)

Research output: Contribution to journal › Article › peer-review

Abstract

© 2019 Universidad Nacional Autonoma de Mexico. All rights reserved. The relationship between financial development and income inequality was analyzed using a database comprising 13 Latin American countries, covering a period from 1990 to 2015. The main variable is financial development, which is measured through the credit to GDP ratio. On the other hand, to measure income inequality, the Gini index was used. To carry out the analysis, the following econometric methods were used: fixed effects, estimated generalized least squares and the method of generalized moments together with estimated generalized least squares. In addition, the following control variables were used: GDP per capita, government expenditure to GDP ratio, trade opening, the inflation rate and the population. It was found that the development of the financial system increases income inequality. These results were validated using different econometric specifications.

Original language	American English
Journal	Contaduria y Administracion
DOIs	https://doi.org/10.22201/FCA.24488410E.2019.1902
State	Published - 1 Jan 2019

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title = "Financial development and income inequality, the Latin America case",

abstract = "{\textcopyright} 2019 Universidad Nacional Autonoma de Mexico. All rights reserved. The relationship between financial development and income inequality was analyzed using a database comprising 13 Latin American countries, covering a period from 1990 to 2015. The main variable is financial development, which is measured through the credit to GDP ratio. On the other hand, to measure income inequality, the Gini index was used. To carry out the analysis, the following econometric methods were used: fixed effects, estimated generalized least squares and the method of generalized moments together with estimated generalized least squares. In addition, the following control variables were used: GDP per capita, government expenditure to GDP ratio, trade opening, the inflation rate and the population. It was found that the development of the financial system increases income inequality. These results were validated using different econometric specifications.",

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