Does Financial Openness Matter in the Relationship between Financial Development and Income Distribution in Latin America?

Abstract

This article examines the effect of financial development on income distribution by analyzing a sample of Latin American countries according to their degree of financial openness for the 1990-2011 period. The period includes the time before and after financial liberalization for most of the countries in the region. As the literature provides inconclusive results regarding the relationship between financial development and income inequality, we aim to determine whether financial openness plays a role in this relationship. Our results provide an explanation for why some countries regardless of their degree of financial openness cannot achieve a reduction in income inequality. © 2016 Taylor & Francis Group, LLC.