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Income inequality and banking crises: Testing the level hypothesis directly

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  • Bellettini, Giorgio
  • Delbono, Flavio
  • Karlström, Peter
  • Pastorello, Sergio

Abstract

We perform an empirical analysis to investigate the relationship between income inequality and the occurrence of banking crises on a panel of 33 advanced countries in the period 1970–2011. Differently from other empirical studies, we focus on levels rather than growth rates of income inequality. We find a statistically significant and positive relationship between the value of the Gini index and the probability of banking crises. This result is confirmed when income distribution is summarized by the top 1% income share.

Suggested Citation

  • Bellettini, Giorgio & Delbono, Flavio & Karlström, Peter & Pastorello, Sergio, 2019. "Income inequality and banking crises: Testing the level hypothesis directly," Journal of Macroeconomics, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:jmacro:v:62:y:2019:i:c:s0164070417305682
    DOI: 10.1016/j.jmacro.2018.08.007
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    Cited by:

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    3. Álvaro Labella & Juan Carlos Rodríguez-Cohard & José Domingo Sánchez-Martínez & Luis Martínez, 2020. "An AHPSort II Based Analysis of the Inequality Reduction within European Union," Mathematics, MDPI, vol. 8(4), pages 1-21, April.
    4. Herradi, Mehdi El & Leroy, Aurélien, 2022. "The rich, poor, and middle class: Banking crises and income distribution," Journal of International Money and Finance, Elsevier, vol. 127(C).

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