BANK COMPETITION, FINANCIAL DEVELOPMENT, AND INCOME INEQUALITY. (5th May 2020)

• Record Type: Journal Article
• Authors: Fu, Zhe; Xi, Dan; Xu, Jia
• Is Part Of: Contemporary economic policy. Volume 39:Number 1(2021)
• Page Start: 42
• Page End: 58
• Publication Date: 2020-05-05
• Subjects: Economic policy -- Periodicals; United States -- Economic policy -- 1993-2001 -- Periodicals; United States -- Economic policy -- 2001- -- Periodicals; 338.9005
• DOI: 10.1111/coep.12481
• Languages: English
• ISSNs: 1074-3529

Abstract

Abstract : Income inequality rises with financial development initially and then drops. We reach this conclusion by numerically solving a heterogeneous agent model parameterized to the Chinese economy. The model features a banking sector with Cournot competition, and the process of financial development in the model economy begins with the deregulation of the banking sector. Based on regressions with the fixed effects and the system generalized method of moments, the empirical analysis also suggests an inverted‐U relationship between income inequality and financial development using provincial data from China. ( JEL E25, G21, G28)