The finance inequality nexus in Portugal: An empirical study

Detalhes bibliográficos
Autor(a) principal: Lakhani, Rishi Ajitkumar
Data de Publicação: 2021
Tipo de documento: Dissertação
Idioma: eng
Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
Texto Completo: http://hdl.handle.net/10071/23838
Resumo: This paper conducts a time-series econometric analysis in order to assess the effect of finance on the distribution of income in Portugal between 1977 to 2016 using annual data. A battery of bank and market-based proxies are used to measure financial indicators (private credit, foreign direct investment, money supply, stock market capitalisation, financial value added and financial openness) to provide a holistic representation of the financial system in terms of depth, access, and efficiency (Svirydzenka, 2016). To ensure robustness, two different measures of the Gini coefficient are employed to proxy income inequality (gross and net). School enrolment (as a proxy for human capital), inflation, real GDP, government spending and trade openness were used as control variables. Additionally, the estimations were conducted using the Generalised Method of Moments (GMM) estimator to control for endogeneity. Linear and non-linear estimations were performed to test the different hypotheses available in literature concerning the relationship between finance and income inequality. Our results suggest that bank-based financial indicators have reduced income inequality while market-based financial indicators have worsened income distribution in Portugal. Additionally, financial liberalisation has increased income inequality in Portugal. The majority of our models support a concave relationship between finance and inequality in Portugal.
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spelling The finance inequality nexus in Portugal: An empirical studyIncome inequalitySistema financeiro -- Financial systemFinancial liberalisationPortugalGMM estimatorDesigualdade de rendimentosDesenvolvimento financeiroLiberalização financeiraGreenwood-JovanovicGMMThis paper conducts a time-series econometric analysis in order to assess the effect of finance on the distribution of income in Portugal between 1977 to 2016 using annual data. A battery of bank and market-based proxies are used to measure financial indicators (private credit, foreign direct investment, money supply, stock market capitalisation, financial value added and financial openness) to provide a holistic representation of the financial system in terms of depth, access, and efficiency (Svirydzenka, 2016). To ensure robustness, two different measures of the Gini coefficient are employed to proxy income inequality (gross and net). School enrolment (as a proxy for human capital), inflation, real GDP, government spending and trade openness were used as control variables. Additionally, the estimations were conducted using the Generalised Method of Moments (GMM) estimator to control for endogeneity. Linear and non-linear estimations were performed to test the different hypotheses available in literature concerning the relationship between finance and income inequality. Our results suggest that bank-based financial indicators have reduced income inequality while market-based financial indicators have worsened income distribution in Portugal. Additionally, financial liberalisation has increased income inequality in Portugal. The majority of our models support a concave relationship between finance and inequality in Portugal.Este estudo pretende avaliar o efeito da financeirização na desigualdade de rendimentos em Portugal utilizando uma série temporal de dados anuais entre 1977 e 2016. Um conjunto de proxies financeiros foram utilizados para o efeito, nomeadamente, o crédito privado, o investimento directo estrangeiro, a oferta de Moeda, a capitalização bolsista, o valor acrescentado financeiro e o grau de abertura financeira, de modo a garantir uma representatividade adequada do Setor Financeiro em termos de profundidade, acesso e eficiência (Svirydzenka, 2016). Para efeitos de robustez, foram empregues duas medidas do coeficiente de Gini, mais especificamente, o coeficiente de Gini líquido e bruto. A taxa de escolarização (como proxy para o capital humano), a inflação, a taxa de crescimento real do PIB, a despesa pública e o grau de abertura comercial foram empregues como variáveis de controlo. As regressões foram estimadas utilizando o Método dos Momentos Generalizado (GMM) para controlar a endogeneidade. Foram estimados modelos lineares e não lineares de modo a testar as diferentes hipóteses disponíveis na literatura sobre a relação entre desigualdade de rendimentos e o desenvolvimento financeiro, nomeadamente, a hipótese linear (Positiva ou Negativa) e a hipótese não-linear (côncava ou convexa). Os resultados obtidos sugerem que o desenvolvimento financeiro bancário reduziu a desigualdade de rendimentos enquanto o desenvolvimento financeiro baseado nos mercados produziu o efeito oposto. Adicionalmente, a liberalização financeira gerou um efeito nefasto na distribuição de rendimentos em Portugal. A maioria dos modelos estimados apoiam a hipótese côncava.2022-12-07T00:00:00Z2021-12-07T00:00:00Z2021-12-072021-10info:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/masterThesisapplication/pdfhttp://hdl.handle.net/10071/23838TID:202814564engLakhani, Rishi Ajitkumarinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-11-09T17:30:02Zoai:repositorio.iscte-iul.pt:10071/23838Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T22:13:29.088752Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse
dc.title.none.fl_str_mv The finance inequality nexus in Portugal: An empirical study
title The finance inequality nexus in Portugal: An empirical study
spellingShingle The finance inequality nexus in Portugal: An empirical study
Lakhani, Rishi Ajitkumar
Income inequality
Sistema financeiro -- Financial system
Financial liberalisation
Portugal
GMM estimator
Desigualdade de rendimentos
Desenvolvimento financeiro
Liberalização financeira
Greenwood-Jovanovic
GMM
title_short The finance inequality nexus in Portugal: An empirical study
title_full The finance inequality nexus in Portugal: An empirical study
title_fullStr The finance inequality nexus in Portugal: An empirical study
title_full_unstemmed The finance inequality nexus in Portugal: An empirical study
title_sort The finance inequality nexus in Portugal: An empirical study
author Lakhani, Rishi Ajitkumar
author_facet Lakhani, Rishi Ajitkumar
author_role author
dc.contributor.author.fl_str_mv Lakhani, Rishi Ajitkumar
dc.subject.por.fl_str_mv Income inequality
Sistema financeiro -- Financial system
Financial liberalisation
Portugal
GMM estimator
Desigualdade de rendimentos
Desenvolvimento financeiro
Liberalização financeira
Greenwood-Jovanovic
GMM
topic Income inequality
Sistema financeiro -- Financial system
Financial liberalisation
Portugal
GMM estimator
Desigualdade de rendimentos
Desenvolvimento financeiro
Liberalização financeira
Greenwood-Jovanovic
GMM
description This paper conducts a time-series econometric analysis in order to assess the effect of finance on the distribution of income in Portugal between 1977 to 2016 using annual data. A battery of bank and market-based proxies are used to measure financial indicators (private credit, foreign direct investment, money supply, stock market capitalisation, financial value added and financial openness) to provide a holistic representation of the financial system in terms of depth, access, and efficiency (Svirydzenka, 2016). To ensure robustness, two different measures of the Gini coefficient are employed to proxy income inequality (gross and net). School enrolment (as a proxy for human capital), inflation, real GDP, government spending and trade openness were used as control variables. Additionally, the estimations were conducted using the Generalised Method of Moments (GMM) estimator to control for endogeneity. Linear and non-linear estimations were performed to test the different hypotheses available in literature concerning the relationship between finance and income inequality. Our results suggest that bank-based financial indicators have reduced income inequality while market-based financial indicators have worsened income distribution in Portugal. Additionally, financial liberalisation has increased income inequality in Portugal. The majority of our models support a concave relationship between finance and inequality in Portugal.
publishDate 2021
dc.date.none.fl_str_mv 2021-12-07T00:00:00Z
2021-12-07
2021-10
2022-12-07T00:00:00Z
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instname_str Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação
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