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2019 | OriginalPaper | Chapter

12. Do Positive Excess Capital Adequacy Ratio Shocks Influence the Income Inequality Dynamics in South Africa?

Authors : Eliphas Ndou, Thabo Mokoena

Published in: Inequality, Output-Inflation Trade-Off and Economic Policy Uncertainty

Publisher: Springer International Publishing

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Abstract

Evidence reveals that a positive excess CAR shock raises income inequality growth. Evidence from counterfactual analysis indicates that the actual decline in credit and GDP growth due to positive excess CAR shock exceeds those of the counterfactual responses. This suggests that increased income inequality growth following the positive excess CAR shocks exacerbates the decline in the real economic activity. From policy perspective, Perugini et. al (2015) suggests that policymakers should cast their nets wider than financial regulatory reforms and consider the effects of their policy changes on influencing the distributive patterns, which include income inequality.

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previous chapter Does Price Stability Impact the Link Between Income Inequality and Consumption Inequality?

next chapter Does an Unexpected Loosening in the Loan to Value Ratio Has Any Distributive Effects via the Inequality Channel?

Ampudia, M., van Vlokhoven, H., & Zochowski, D. (2014). Financial fragility of the Euro area households (Working chapter series 1737). European Central Bank.

Carpantier, F. F., Olivera, J., & van Kerm, P. (2017, forthcoming). Macroprudential policy and household wealth inequality. Journal of International Money and Finance, 6, 87–105.

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Gumata, N., & Ndou, E. (2017). Labour market and fiscal policy adjustments to shocks: The role and implications for price and financial stability in South Africa. Cham, Switzerland: Palgrave Macmillan.

Johansson, A. C., & Wand, X. (2014). Financial sector policies and income inequalities. China Economic Review, 31, 367–378.CrossRef

Perugini, C., Holscher, J., & Collie, S. (2016). Inequality, credit and financial crises. Cambridge Journal of Economics, 40(1), 227–257.CrossRef

Stiglitz, J. E. (2015). New theoretical perspectives on the distribution of income and wealth amongst individuals: Part IV—Land and credit (NBER working chapters 21192).

Title: Do Positive Excess Capital Adequacy Ratio Shocks Influence the Income Inequality Dynamics in South Africa?
Authors: Eliphas Ndou
Thabo Mokoena
Publisher: Springer International Publishing
Book: Inequality, Output-Inflation Trade-Off and Economic Policy Uncertainty
Print ISBN: 978-3-030-19802-2

Electronic ISBN: 978-3-030-19803-9

Copyright Year: 2019
DOI: https://doi.org/10.1007/978-3-030-19803-9_12