Foreign bank ownership and income inequality: empirical evidence |
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Authors: | Manthos D. Delis Iftekhar Hasan Nikolaos Mylonidis |
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Affiliation: | 1. Montpellier Research in Management, Montpellier Business School, Montpellier, Francem.delis@montpellier-bs.com;3. Fordham University, Bank of Finland and University of Sydney, New York, NY, USAhttps://orcid.org/0000-0003-2469-0539;4. Department of Economics, University of Ioannina, University of Ioannina Campus, Loannina, Greece |
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Abstract: | ABSTRACTUsing country-level panel data over 1995–2013 on within-country income inequality and foreign bank presence, this paper establishes a positive relation between the two, running from higher foreign bank presence to income inequality. Given that foreign bank participation increased by 62% over the period 1995 to 2013, our baseline results imply a 5.8% increase in the Gini coefficient on average over this period, ceteris paribus. These results are robust to the inclusion of country and year fixed effects and to the use of restrictions on foreign bank entry in the host countries as an instrumental variable. We show that this positive effect is channelled through the lack of greenfield entry and the associated lower levels of competition. |
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Keywords: | Foreign banks income inequality bank competition and greenfield entry country panel data |
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