Journal Article

Bank Regulations and Income Inequality: Empirical Evidence

Manthos D. Delis, Iftekhar Hasan and Pantelis Kazakis

in Review of Finance

Volume 18, issue 5, pages 1811-1846
Published in print August 2014 | ISSN: 1572-3097
Published online October 2013 | e-ISSN: 1573-692X | DOI:
Bank Regulations and Income Inequality: Empirical Evidence

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  • Economic Development


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This article provides cross-country evidence that variations in bank regulatory policies result in differences in income distribution. In particular, the overall liberalization of banking systems decreases income inequality significantly. However, this effect becomes insignificant for countries with low levels of economic and institutional development and for market-based economies. Among liberalization policies, credit and interest rate controls have the most significant negative effect on inequality. Privatizations and liberalization of international capital flows also decrease income inequality; the latter also increases the income share of the relatively poor. In contrast, liberalization of securities markets increases income inequality substantially.

Keywords: G28; O15; O16

Journal Article.  13543 words.  Illustrated.

Subjects: Financial Regulation ; Economic Development

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