Abstract

GOMEZ RODRIGUEZ, Tomás; RIOS BOLIVAR, Humberto  and  ZAMBRANO REYES, Adriana. Income Inequality and Financial System Development a Multidimensional Approach. Rev. mex. econ. finanz [online]. 2022, vol.17, n.1, e493.  Epub Oct 28, 2022. ISSN 2448-6795.  https://doi.org/10.21919/remef.v17i1.493.

This paper explores the relationship between the financial system and income inequality. The Ordinary Least Squares method was used as the base estimation and the Generalized Least Squares Estimated method with two-way random effects as a robustness test. The results for the banking sector indicate that depth, efficiency and market structure exhibit evidence in favor of the hypothesis of an increase in income inequality. Similarly, there is evidence of a positive relationship between lower levels of competition and income inequality. According to the results, it is recommended to guarantee a level playing field in the use of financial services. The main limitation of this study is that the access dimension was not considered for the banking sector. The original contribution of this research is to use four different measures of income inequality. The depth dimension for both the banking sector and financial markets has the effect of increasing income inequality. While the stability dimension of the banking sector and the efficiency dimension of financial markets have a redistributive effect.

Keywords : G10; C33; D3; Financial system; data panel; Income inequality.

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