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Does Credit Composition have Asymmetric Effects on Income Inequality? New Evidence from Panel Data

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  • Ünal Seven

    (Central Bank of the Republic of Turkey, İstiklal Caddesi, No. 10, Ulus, Ankara 06100, Turkey
    Department of Basic Sciences, Turkish Military Academy, National Defense University, Devlet Mahallesi, Kara Harp Okulu Caddesi, Çankaya, Ankara 06654, Turkey)

  • Dilara Kilinc

    (Department of Economics, Izmir University of Economics, Sakarya Caddesi, No. 156, Balçova, Izmir 35330, Turkey)

  • Yener Coskun

    (Capital Markets Board of Turkey, Eskişehir Yolu, Ankara 06530, Turkey
    Department of Business Administration, Middle East Technical University, Üniversiteler Mahallesi, Dumlupınar Bulvarı, No. 1, Çankaya, Ankara 06800, Turkey)

Abstract

This paper studied the effects of credit to private non-financial sectors on income inequality. In particular, we focused on the distinction between household and firm credits, and investigated whether these two types of credit had adverse effects on income inequality. Employing cross-section augmented cointegrating regressions and using balanced panel data for 30 developed and developing countries over the period from 1995 to 2013, we showed that firm credit reduced income inequality, whereas there was no significant impact of household credit on income inequality. We concluded that it was not the size of the private credit but its composition which mattered in reducing income inequality, due to the asymmetric effects of different types of credit.

Suggested Citation

  • Ünal Seven & Dilara Kilinc & Yener Coskun, 2018. "Does Credit Composition have Asymmetric Effects on Income Inequality? New Evidence from Panel Data," IJFS, MDPI, vol. 6(4), pages 1-15, September.
    • Handle: RePEc:gam:jijfss:v:6:y:2018:i:4:p:82-:d:171938
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