Desarrollo financiero y desigualdad de ingresos: evidencia para América Latina

Abstract

This researh work analyzes the relationship between financial development and income inequality for an unbalanced data panel of seventeen Latin American countries during the period 1995-2016. For this, four dimensions of financial development are considered: depth, efficiency, stability and liberalization. Three types of analysis are performed, first of all it is studied if the four financial dimensions are linearly related to income inequality. Secondly, it is studied if the relationship between financial development and income inequality depends on the income level of the countries. Finally, it is investigated if the relationship between financial depth and income inequality can be explained by the non-linear hypothesis of Greenwood-Jovanovic. Using the GMM estimator from Arellano–Bover/Blundell–Bond, it is found that financial efficiency and stability help to reduce inequality, while financial depth and liberalization contribute to increasing it. The results also show that for high-income countries financial depth is positively related to inequality, while for high-middle-income countries it is negatively related. Finally Analyzing the depth dimension through the non-linear specification, it is found evidence in favor of the Greenwood-Jovanovic hypothesis that stands the relationship between financial development and income inequality has an inverted U-shape. Estimates are made by controlling factors such as public spending, years of schooling, trade openness, inflation and GDP per capita.