Resource title

Financial Development and Inequality: Brazil 1985-99

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Resource description

We examine the impact that financial development had on earnings inequality in Brazil in the 1980?s and 90?s. The empirical evidence, based on panel time series and time series data, shows that more broad access to financial and credit markets had a significant and robust effect in reducing inequality during the period investigated. We suggest that this is not only because the poor can invest the acquired credit in all sorts of productive activities, but also because those with access to financial markets can insulate themselves against recurrent poor macroeconomic performance, which is exemplified by extreme inflation rates. The main implication of the results is that a seemingly non-distortionary policy, such as more credit aimed at the poor, alleviates the high inequality present in Brazil and consequently improves welfare without distorting economic efficiency.

Resource author

Manoel F. Meyer Bittencourt

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/19833

Resource license

Adapt according to the presented license agreement and reference the original author.