Financialization, household debt and income inequality: Empirical evidence

    Research output: Contribution to journalArticlepeer-review

    15 Citations (Scopus)
    234 Downloads (Pure)

    Abstract

    The aftermath of the most recent financial crisis has prompted a surge of interest in the impact of finance capitalism on national economies and individual livelihoods. Yet, research on the impact of financialisation on income inequality, remains scant and inconclusive. Using data for 33 countries over 1996-2015, we provide evidence that of the three financialisation dimensions - of the financial, nonfinancial and household sectors - only household financialisation exerts a positive and robustly significant impact on income inequality. Re-estimations by system generalised-methods-of-moments (SYS-GMM) and difference-GMM as well as alternative income inequality measures, confirm the significant, positive impact of household indebtedness over all other financialisation dimensions. Following disaggregation of household financialisation into its three main components (mortgage, consumer and other purposes debt), we also uncover that it is increasing levels of household debt aimed at sustaining living standards that is accountable for the positive impact on income inequality, whilst mortgage debt reduces it.
    Original languageEnglish
    Article numberIJFE1886
    Pages (from-to)1917-1937
    Number of pages21
    JournalInternational Journal of Finance and Economics
    Volume26
    Issue number2
    Early online date3 Aug 2020
    DOIs
    Publication statusPublished - Apr 2021

    Bibliographical note

    This is the peer reviewed version of the following article: De Vita, G & Luo, Y 2021, 'Financialization, household debt and income inequality: Empirical evidence', International Journal of Finance and Economics, vol. 26, no. 2, IJFE1886, pp. 1917-1937, which has been published in final form at 10.1002/ijfe.1886 This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.

    Keywords

    • Financialisation
    • Income inequality
    • financial sector
    • Non-financial sector
    • Household debt

    Fingerprint

    Dive into the research topics of 'Financialization, household debt and income inequality: Empirical evidence'. Together they form a unique fingerprint.

    Cite this