Browsing by Subject "wealth inequality"

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  • Horvath, Roman; Horvatova, Eva; Siranova, Maria (2017)
    BOFIT Discussion Papers 12/2017
    We examine the determinants of financial development using our global sample and employing a rich set of measures of financial development that assess the degree of depth, access, stability and efficiency of financial intermediaries. We use Bayesian model averaging to test competing theories within this unifying framework. Examining nearly 40 potential determinants of financial development, we find that the rule of law and the level of economic development are the most important. Wealth inequality is irrelevant for banking sector development but positively associated with stock market development. Finally, our results suggest that financial market regulations matter for stock market efficiency and financial stability.
  • Mäki-Fränti, Petri; Silvo, Aino; Gulan, Adam; Kilponen, Juha (2022)
    Bank of Finland Research Discussion Papers 3/2022
    We use Finnish household-level registry and survey data to study the effects of ECB’s monetary policy on the distribution of income and wealth. We find that monetary easing has a large positive effect on aggregate economic activity in Finland, but its overall net impact on income and wealth inequality is negligible. Monetary easing increases households’ gross income by reducing unemployment and leading to a general rise in wages, while at the same time it boosts asset prices. These different channels have counteracting effects on income and wealth inequality, as measured by the Gini coefficient and the ratios of income and wealth of the 90th percentile to the 50th percentile. The reduction in aggregate unemployment benefits especially households in lower income quintiles, where the initial rate of unemployment is high. Households in the upper income quintiles, where the rate of employment is higher, benefit relatively more from an increase in wages. An increase in house prices benefits all homeowners. In terms of net wealth, households with large mortgages, in the lower wealth quintiles, benefit the most from an increase in house prices due to a leverage effect. An increase in stock prices, in turn, benefits mainly households in the top wealth quintile.
  • Knüpfer, Samuli; Rantapuska, Elias; Sarvimäki, Matti (2017)
    Bank of Finland Research Discussion Papers 25/2017
    Published on 1 September 2017 as "Savvy parent, savvy child? Intergenerational correlations in returns to financial wealth". Second version published on 6 June 2019 as "Why does portfolio choice correlate across generations". Third version published on 10 November 2021 as "Social interaction in the family: Evidence from investors’ security holdings".
    We show investors tend to hold the same securities as their parents. This intergenerational correlation is stronger for mothers and family members who are more likely to communicate with each other. An instrumental variables estimation and a natural experiment suggest the correlation reflects social influence. This influence runs not only from parents to children, but also vice versa. The resulting holdings of identical securities increase intergenerational correlations in portfolio choice, exacerbate wealth inequality, and amplify the consequences of behavioral biases.