Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/35601 
Year of Publication: 
2008
Series/Report no.: 
IZA Discussion Papers No. 3796
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
One of the central concerns in Latin America and the Caribbean (LAC) has been the reduction of poverty and inequality so prevalent in the continent. Using large world samples, the literature has found that financial development increases economic growth, increases the income of the poor, and reduces inequality. This paper studies the effects of financial development on the whole distribution of income in LAC. We find that the income of the poorest quintile has not been affected by expansion in the financial system. However, we do find that financial development has had a disproportionate positive effect on the incomes of the second, third and fourth quintiles. We also find some evidence for the Greenwood-Jovanovic (1991) hypothesis that this positive effect only begins after a country crosses a certain economic development threshold.
Subjects: 
Distribution of income
financial development
inequality
JEL: 
O11
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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