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The impact of financial openness on income inequality

Author

Listed:
  • Cheng Zhou

    (Xi'an University of Technology)

Abstract

This study empirically analyzes the impact of financial openness on income inequality using a sample of 68 countries from 1980 to 2019. The main finding is that financial openness expands income disparity by increasing the income share of high-income groups while decreasing the income share of low-income groups. In developing countries, financial openness has the largest positive impact on income inequality, emerging market countries are second, and developed countries are third. External shocks, which are transmitted through the interplay of the exchange rate and interest rate channels, exacerbate income inequality as a result of financial openness.

Suggested Citation

  • Cheng Zhou, 2022. "The impact of financial openness on income inequality," Economics Bulletin, AccessEcon, vol. 42(4), pages 1931-1945.
    • Handle: RePEc:ebl:ecbull:eb-22-00244
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2022/Volume42/EB-22-V42-I4-P160.pdf
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    References listed on IDEAS

    as
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    5. Xiang Li & Dan Su, 2021. "Does Capital Account Liberalization Affect Income Inequality?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(2), pages 377-410, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Income inequality; Financial openness; Income quartile;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F3 - International Economics - - International Finance

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