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Does Inequality Lead to a Financial Crisis? Revisited
Xinhua Gu; Bihong Huang
Source PublicationReview of Development Economics

Financial crises have been attributed to rising income inequality via its induced high household leverage as observed in the USA and similar economies. Alternatively it has been suggested this is not a general relationship since it was found that inequality had no bearing on crises in 14 advanced countries over 1920–2008; instead, low interest rates and business cycle expansions are found to be the only two robust determinants of credit booms leading to crises. Using a similar dataset, this paper provides no support for the generality of the above findings by embracing country heterogeneity. The paper shows that real evidence still points back to the inequality‐leverage–crisis nexus for financialized economies. The implication is that finance can hardly be sustainable under rising inequality.

Indexed BySSCI ; SSCI
WOS Research AreaDevelopment Studies ; Business & Economics
WOS SubjectDevelopment Studies ; Economics
WOS IDWOS:000339552400007
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Cited Times [WOS]:14   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionFaculty of Business Administration
Corresponding AuthorBihong Huang
AffiliationFaculty of Business Administration, University of Macau, Av. Padre Tomás Pereira, Taipa, Macao
First Author AffilicationFaculty of Business Administration
Corresponding Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Xinhua Gu,Bihong Huang. Does Inequality Lead to a Financial Crisis? Revisited[J]. Review of Development Economics,2014,18(3):502-516.
APA Xinhua Gu,&Bihong Huang.(2014).Does Inequality Lead to a Financial Crisis? Revisited.Review of Development Economics,18(3),502-516.
MLA Xinhua Gu,et al."Does Inequality Lead to a Financial Crisis? Revisited".Review of Development Economics 18.3(2014):502-516.
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