Financial crises and income inequality

Abstract

This paper examines the effects of financial crises on income inequality using a panel of 128 countries over the period 1960-2019. We focus on different types of financial crises: banking, currency, debt, and twin and triple crises. Our results show that any type of financial crisis results in a larger income gap between the rich and the poor. It is noteworthy that while little attention has been given to debt and twin and triple crises, they are associated with higher income inequality than banking and currency crises. Nevertheless, currency, debt, and twin and triple crises do not significantly relate to income inequality in developed countries.