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Article

Rethinking the Income Inequality and Financial Development Nexus. A Study of Nine OECD Countries

1
Economic and Business Faculty, UNED (National University of Distance Education), C/ Senda del Rey 11, 28040 Madrid, Spain
2
Economic and Business Faculty, University of Valladolid Av. Valle de Esgueva, 6, 47011 Valladolid, Spain
*
Author to whom correspondence should be addressed.
Sustainability 2020, 12(13), 5449; https://doi.org/10.3390/su12135449
Received: 8 June 2020 / Revised: 24 June 2020 / Accepted: 29 June 2020 / Published: 6 July 2020
(This article belongs to the Collection Sustainability in Financial Industry)
Sustainable finance seeks to increase the contribution of finance to sustainable and inclusive growth. The global financial crisis of 2008 provoked the return of inequality in advanced countries to levels typical of a century ago. The aim of this paper is to empirically analyze the relationship between finance and income inequality for a group of nine OECD countries over the pre-crisis and post-crisis periods (2000–2015). The model proposed in this study simultaneously considers two explanatory variables for measuring financial depth (credit provision and capital markets) and a new multidimensional variable to measure the financial system’s resilience (a composite indicator), and conducts panel data analysis. The empirical results confirm that in terms of financial depth, the "too much finance hypothesis" holds. We also find that financial system’s resilience helps alleviate existing income inequality and that income inequality appears higher in liberal market economies than in coordinated economies. These results encourage policymakers to look beyond traditional public redistribution interventions and to pay attention to other financial variables related to the financialization process, the behavior of financial intermediaries, and the specific environment in which they operate. View Full-Text
Keywords: sustainable finance; income inequality; financial depth; resilience; composite indicator; financial crisis; coordinated and liberal market economies sustainable finance; income inequality; financial depth; resilience; composite indicator; financial crisis; coordinated and liberal market economies
MDPI and ACS Style

de la Cuesta-González, M.; Ruza, C.; Rodríguez-Fernández, J.M. Rethinking the Income Inequality and Financial Development Nexus. A Study of Nine OECD Countries. Sustainability 2020, 12, 5449. https://doi.org/10.3390/su12135449

AMA Style

de la Cuesta-González M, Ruza C, Rodríguez-Fernández JM. Rethinking the Income Inequality and Financial Development Nexus. A Study of Nine OECD Countries. Sustainability. 2020; 12(13):5449. https://doi.org/10.3390/su12135449

Chicago/Turabian Style

de la Cuesta-González, Marta, Cristina Ruza, and José M. Rodríguez-Fernández 2020. "Rethinking the Income Inequality and Financial Development Nexus. A Study of Nine OECD Countries" Sustainability 12, no. 13: 5449. https://doi.org/10.3390/su12135449

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