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@article{258b08734bae491e9d767965133ccc2f,
title = "An investigation of the effects of income inequality on financial fragility: Evidence from Organization for Economic Co‐operation and Development countries",
abstract = "The main scope of the paper is to investigate the proposition that rising income inequality results in systemic financial instability in developed countries. In particular, 33 OECD (Organization for Economic Co‐operation and Development) countries are studied in a panel Vector Autoregression (VAR) framework analysis over 1995–2015. There is a growing literature on the effects of income inequality on financial crises. This study provides significant evidence in favour of a positive relationship between income inequality and financial fragility, when particular factors are controlled for. Complementary findings also suggest that (a) debt accumulation in the private sector significantly depends on credit expansion, (b) the debt levels of the private sector and households co‐move over time, and (c) financial deregulation significantly contributes to financial instability. Therefore, policymakers should take into account regulatory reforms that will promote institutional and financial innovations to restrict debt accumulation and render the financial system more robust to destabilising shocks.",
keywords = "debt accumulation, financial deregulation, financial instability, income inequality, OECD",
author = "Chrysovalantis Amountzias",
year = "2019",
month = jan,
day = "1",
doi = "10.1002/ijfe.1660",
language = "English",
volume = "24",
pages = "241--259",
journal = "International Journal of Finance and Economics",
issn = "1099-1158",
publisher = "John Wiley and Sons Ltd",
number = "1",

}

RIS

TY - JOUR

T1 - An investigation of the effects of income inequality on financial fragility: Evidence from Organization for Economic Co‐operation and Development countries

AU - Amountzias, Chrysovalantis

PY - 2019/1/1

Y1 - 2019/1/1

N2 - The main scope of the paper is to investigate the proposition that rising income inequality results in systemic financial instability in developed countries. In particular, 33 OECD (Organization for Economic Co‐operation and Development) countries are studied in a panel Vector Autoregression (VAR) framework analysis over 1995–2015. There is a growing literature on the effects of income inequality on financial crises. This study provides significant evidence in favour of a positive relationship between income inequality and financial fragility, when particular factors are controlled for. Complementary findings also suggest that (a) debt accumulation in the private sector significantly depends on credit expansion, (b) the debt levels of the private sector and households co‐move over time, and (c) financial deregulation significantly contributes to financial instability. Therefore, policymakers should take into account regulatory reforms that will promote institutional and financial innovations to restrict debt accumulation and render the financial system more robust to destabilising shocks.

AB - The main scope of the paper is to investigate the proposition that rising income inequality results in systemic financial instability in developed countries. In particular, 33 OECD (Organization for Economic Co‐operation and Development) countries are studied in a panel Vector Autoregression (VAR) framework analysis over 1995–2015. There is a growing literature on the effects of income inequality on financial crises. This study provides significant evidence in favour of a positive relationship between income inequality and financial fragility, when particular factors are controlled for. Complementary findings also suggest that (a) debt accumulation in the private sector significantly depends on credit expansion, (b) the debt levels of the private sector and households co‐move over time, and (c) financial deregulation significantly contributes to financial instability. Therefore, policymakers should take into account regulatory reforms that will promote institutional and financial innovations to restrict debt accumulation and render the financial system more robust to destabilising shocks.

KW - debt accumulation

KW - financial deregulation

KW - financial instability

KW - income inequality

KW - OECD

UR - http://www.scopus.com/inward/record.url?scp=85055151465&partnerID=8YFLogxK

U2 - 10.1002/ijfe.1660

DO - 10.1002/ijfe.1660

M3 - Article

VL - 24

SP - 241

EP - 259

JO - International Journal of Finance and Economics

JF - International Journal of Finance and Economics

SN - 1099-1158

IS - 1

ER -