Does more finance mean more inequality in times of crisis?

Mardi | 2018-01-30
Salle des thèses 16h – 17h20


Whole arrays of recent empirical studies show that both banking crises and the increase in the size of the financial sector play a central and important role in the evolution of income inequalities over the last decades. To our knowledge, no study has so far sought to link these three elements with the aim to investigate the role of the size of the banking sector in the amplification of income inequalities after the outbreak of banking crises. This paper seeks to address this issue based on a sample of 69 banking crises in 54 countries over the 1977-2013 periods. Our analysis reveals that the size of the banking sector significantly increases income inequalities after banking crises. This result is robust to a broad range of alternative specifications and is unaffected by various potential sources of endogeneity. Finally, we bring the empirical evidence that the effect of the size of the banking sector on the redistributive impact of banking crises appears to be linear and to be stronger for developing countries.