Financial structure and income inequality

We empirically investigate whether financial structures affect income inequality. Using panel data for 97 economies covering above two decades preceding the FinTech surge we uncover a non-monotonic relationship. More finance reduces income inequality up to a certain point, beyond which inequality rises if finance expands via market-based financ -ing, while it does not when finance grows via bank lending. The finance-inequality rela-tionship is not structurally affected by the occurrence of crises, while it is reinforced in countries featuring a higher degree of financial openness. Financial deepening always reduces inequality when it takes the form of improved financial access.(c) 2023 Elsevier Ltd. All rights reserved.