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Financial Structure and Income Inequality: Evidence from China

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  • Xiaohui Hou
  • Shuo Li
  • Qing Wang

Abstract

This study investigates the relationship between financial structure and income inequality in China and explores a channel for changes of financial structure to influence income inequality. Our results suggest that, relative to total bank credit, an increase in the raised capital from the stock market reduces income inequality, whereas a rise of turnover in the stock market augments income inequality. Financial structure affects income inequality by influencing the development of medium-sized enterprises. Our evidence supports the financial structure relevancy view. To reduce income inequality, the Chinese government should help to promote equity financing and decrease excessive speculation on the stock market.

Suggested Citation

  • Xiaohui Hou & Shuo Li & Qing Wang, 2018. "Financial Structure and Income Inequality: Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(2), pages 359-376, January.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:2:p:359-376
    DOI: 10.1080/1540496X.2017.1347780
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    Cited by:

    1. Shikha Singh & Mandira Sarma, 2020. "Financial Structure and Stability: An Empirical Exploration," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(special i), pages 9-32.
    2. Feng, Lingbing & Fu, Tong & Kutan, Ali M., 2019. "Can government intervention be both a curse and a blessing? Evidence from China's finance sector," International Review of Financial Analysis, Elsevier, vol. 61(C), pages 71-81.
    3. Hsieh, Joyce & Chen, Ting-Cih & Lin, Shu-Chin, 2019. "Financial structure, bank competition and income inequality," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 450-466.
    4. Hao, Yunping & Zhang, Bing, 2024. "The impact of digital financial usage on resident’s income inequality in China: An empirical analysis based on CHFS data," Journal of Asian Economics, Elsevier, vol. 91(C).
    5. Jelson Serafim, 2021. "Financial deepening, Stock market, Inequality and Poverty: Some African Evidence," Working Papers REM 2021/0177, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    6. Guo, Wen & Yang, Bo & Ji, Jiong & Liu, Xiaorui, 2023. "Green finance development drives renewable energy development: Mechanism analysis and empirical research," Renewable Energy, Elsevier, vol. 215(C).
    7. Law, Siong Hook & Naseem, N.A.M. & Lau, Wei Theng & Trinugroho, Irwan, 2020. "Can innovation improve income inequality? Evidence from panel data," Economic Systems, Elsevier, vol. 44(4).
    8. Qi Jing & Qi Tang & Mei Sun & Xiaohong Li & Gang Chen & Jun Lu, 2020. "Regional Disparities of Rehabilitation Resources for Persons with Disabilities in China: Data from 2014 to 2019," IJERPH, MDPI, vol. 17(19), pages 1-14, October.

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