Artikel

Income inequality and financial crises: Evidence from the bootstrap rolling window

This study aims to investigate the validity of the Rajan hypothesis, which argues that increasing income inequality plays a key role in the outbreak of financial crises. The relationship between income inequality and credit booms are examined in 10 developed countries: Australia, Canada, Denmark, Finland, France, the United Kingdom, Japan, Norway, Sweden, and the United States. In doing so, a bootstrap rolling-window estimation procedure is used to detect any possible causal link between inequality and credit booms in financial crisis sub-periods. The results reveal that the Rajan hypothesis is supported for the 1989 crisis in Australia, the 1991 and 2007 crises in the United Kingdom, and the 1929 and 2007 crises in the United States. Therefore, increasing income inequality has positive predictive power on credit booms in Anglo-Saxon countries. However, the hypothesis is not confirmed for Scandinavian and continental European countries. Our study is novel in its use of the bootstrap rolling-window procedure, which allows us to detect the possible relationship between inequality and credit booms in financial crises. The findings suggest that a progressive taxation policy or investments to accumulate human capital and increase the labor force are more beneficial than temporary solutions.

Sprache
Englisch

Erschienen in
Journal: Financial Innovation ; ISSN: 2199-4730 ; Volume: 5 ; Year: 2019 ; Issue: 1 ; Pages: 1-23 ; Heidelberg: Springer

Klassifikation
Management
Aggregate Factor Income Distribution
Money Supply; Credit; Money Multipliers
Financial Crises
Thema
Income inequality
Credit booms
Financial crisis
Rolling window estimation

Ereignis
Geistige Schöpfung
(wer)
Destek, Mehmet Akif
Koksel, Bilge
Ereignis
Veröffentlichung
(wer)
Springer
(wo)
Heidelberg
(wann)
2019

DOI
doi:10.1186/s40854-019-0136-2
Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Artikel

Beteiligte

  • Destek, Mehmet Akif
  • Koksel, Bilge
  • Springer

Entstanden

  • 2019

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