An Analysis of the Differential Impact of Financialization on Upper, Middle and Bottom Income Shares

Objective: This study examines the impact of different financialization measures on inequality among various income groups (upper, middle, and lower). Theoretical Framework: The present analysis explores the relationship between financialization and income inequality. This investigation seeks to provide a foundational understanding of the distribution of income across different income brackets and their relationship with the growing financialization environment. Method: Robustness and reliability are ensured through the use of panel corrected standard errors (PCSE). Data was collected from World Bank Development Indicators, World Inequality Database. Results and Discussion: Different income groups demonstrate distinct relationships with various financialization indicators, reflecting variations in access to financial resources, investment behaviors, and economic participation. These disparities highlight how financialization impacts income groups differently, shaping their financial stability, asset accumulation, and overall economic well-being. Research Implications: financialization significantly shapes income inequality, serving as its main driving force. However, relationship between financialization and inequality varies across income groups. Tangible economic activities primarily affect the lower 50% of earners, while financial activities positively influence the upper and middle-income groups through distinct financialization channels. Originality/Value: This study proposes a comprehensive framework that integrates financialization indicators with different income groups, providing an innovative tool for analyzing the relationship between financialization and income inequality.