首页|Income inequality and systemic banking crises: A nonlinear nexus

Income inequality and systemic banking crises: A nonlinear nexus

扫码查看
原文链接
  • NETL
  • NSTL
  • Elsevier
Motivated by Rajan's work, we propose that income inequality and systemic banking crises have a nonlinear nexus. In addition to examining the linear "Rajan effect," we propose a "Kuznets effect" based on an assumption that income inequality has a nonlinear impact on growth, conditional on the stage of economic development, and thus plays a nonlinear role in modeling crises. We test the existence of this nexus using a sample covering 172 economies for a period of fifty years. We confirm that the relationship is U-shaped and identify the threshold level of income inequality that is beneficial for financial stability. Additionally, the U-test and area under the receiver operating characteristic (AUROC) statistics confirm that nonlinearity, and our model has good predictive performance of forecasting. Furthermore, the results of our panel regressions are consistent and are robust to several tests. We then identify the Rajan and Kuznets effects using a two-step test. We conclude that the impact of income inequality on the occurrence of systemic banking crises is U-shaped.

Income inequalityKuznets effectRajan effectSystemic banking crises

Shengquan Wang

展开 >

Institute of Advanced Studies in Humanities and Social Sciences, Beijing Normal University, Zhuhai 519087, China

2023

10.1016/j.ecosys.2023.101123

Economic systems

Economic systems

ISSN：0939-3625
年,卷(期)：2023.47(4)
  • 68