<abstract xmlns="http://www.w3.org/1999/xhtml">
<p>The finance–inequality nexus has been a major topic of discussion since the 1990s and became even more so after the financial crisis of 2007–08. This paper aims to empirically investigate whether financial development and/or financial openness increased or decreased income inequality in Hungary over the period of 1971–2019. An empirical analysis of an autoregressive distributed lag (ARDL) model suggests the existence of long-run co-integration between the analysed variables. Financial openness contributes to reducing Hungarian income inequality in the short run but fuels greater income inequality in the long run. Whereas the effects of financial development on inequality vary according to the indicators, the domestic credit by banks has a significant negative effect on inequality in the short and long run, while the impact of the credit to the private sector from all the sectors on inequality is insignificant.</p>
</abstract>

The finance–inequality nexus has been a major topic of discussion since the 1990s and became even more so after the financial crisis of 2007–08. This paper aims to empirically investigate whether financial development and/or financial openness increased or decreased income inequality in Hungary over the period of 1971–2019. An empirical analysis of an autoregressive distributed lag (ARDL) model suggests the existence of long-run co-integration between the analysed variables. Financial openness contributes to reducing Hungarian income inequality in the short run but fuels greater income inequality in the long run. Whereas the effects of financial development on inequality vary according to the indicators, the domestic credit by banks has a significant negative effect on inequality in the short and long run, while the impact of the credit to the private sector from all the sectors on inequality is insignificant.

Revisiting the Financial Development and Income Inequality Nexus: Evidence from Hungary

Hungarian University of Agriculture and Life Sciences (MATE)

Acta Universitatis Sapientiae, Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The finance–inequality nexus has been a major topic of discussion since the 1990s and became even more so after the financial crisis of 2007–08. This paper...

Revisiting the Financial Development and Income Inequality Nexus: Evidence from Hungary

Published Online: Oct 19, 2023

Page range: 227 - 257

DOI: https://doi.org/10.2478/auseb-2023-0011

Keywords
financial development, income inequality, Hungary, ARDL

© 2023 Faeyzh Barhoom, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Revisiting the Financial Development and Income Inequality Nexus: Evidence from Hungary

Published Online: Oct 19, 2023

Page range: 227 - 257

DOI: https://doi.org/10.2478/auseb-2023-0011

Keywordsfinancial development, income inequality, Hungary, ARDL

© 2023 Faeyzh Barhoom, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Keywords
financial development, income inequality, Hungary, ARDL