Finance, distribution and the economic objective of cooperative financial institutions

Khafagy, Amr ORCID: 0000-0001-8976-6405 (2019) Finance, distribution and the economic objective of cooperative financial institutions. Annals of Public and Cooperative Economics, 90 (3). pp. 487-511. doi:10.1111/apce.12216

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Abstract

This paper proposes a model where the structure rather than the size of the financial sector explains its influence on income distribution. Because of information asymmetries, a financial sector dominated solely by profit‐maximizing financial intermediaries will increase income and wealth inequality as it gives preferential access to credit for high‐income agents, whereas a diversified inclusive financial sector with alternative models of finance, like cooperatives, will reduce the inequality gap. No full convergence in income distribution can be realized through finance only and there is still a need for redistribution policies. Accordingly, an objective function for cooperative financial institutions should define a desired pricing behaviour that can increase the income of members at a rate higher than the average growth rate of the economy.

Item Type:	Article
Article Type:	Article
Uncontrolled Keywords:	Income inequality, financialization, financial cooperatives, financial institutions
Subjects:	H Social Sciences > HA Statistics H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance > HG4001 Finance management. Business finance
Divisions:	Schools and Research Institutes > Countryside and Community Research Institute
Research Priority Areas:	Place, Environment and Community
Depositing User:	Imogen Young
Date Deposited:	12 Mar 2019 14:37
Last Modified:	04 Feb 2022 14:02
URI:	https://eprints.glos.ac.uk/id/eprint/6615

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