Finance and wealth inequality. (November 2020)

• Record Type: Journal Article
• Authors: Hasan, Iftekhar; Horvath, Roman; Mares, Jan
• Is Part Of: Journal of international money and finance. Volume 108(2020)
• Publication Date: 2020-11
• Subjects: D31 -- E21; Wealth inequality -- Finance -- Bayesian model averaging; International finance -- Periodicals; Foreign exchange -- Periodicals; Finances internationales -- Périodiques; Change -- Périodiques; Foreign exchange; International finance; Periodicals; 332.04205
• DOI: 10.1016/j.jimonfin.2020.102161
• Languages: English
• ISSNs: 0261-5606

Abstract

Highlights: Cross-country determinants of wealth inequality examined. Financial variables among most important determinants. Finance reduces wealth inequality. Abstract: Using a global sample, this paper investigates the determinants of wealth inequality capturing various economic, financial, political, institutional, and geographical indicators. Using instrumental variable Bayesian model averaging, it reveals that only a handful of indicators robustly matters and finance plays a key role. It reports that while financial depth increases wealth inequality, efficiency and access to finance reduce inequality. In addition, redistribution and education are associated with lower inequality whereas wars and openness to international trade contribute to greater wealth inequality.