Impact of financial crises on social equality among countries: A systematic review

Year 2023, Volume: 5 Issue: 9, 463 - 488, 01.10.2023

Dina Ghandour

Abstract

Purpose: The study aims is to assess the impact of financial crisis on social equality, in terms of income and wealth distribution, across countries. Specifically, it covers the implications of the Great Depression, the recent financial crisis on both developing and developed nations.
Proposed Design/Methodology/Approach: A qualitative research approach was adopted with the intention of synthesizing the relevant literature to collect the secondary data. Furthermore, semi-structured interviews were used to gather the primary data and were analyzed using thematic content analysis.
Findings An in-depth analysis of the literature shows that there are numerous variables, which vary from country to country, that affect how the global financial crisis has affected the distribution of income and wealth among countries. The wealth gap between the rich and the poor in developed economies has lately reached its largest point. Even while there are still significant disparities in access to resources like money, healthcare and education, inequality has lessened in some of these nations and is more diversified in developing ones. Both developed and developing countries suffer when trade, commerce, and government spending are slashed during financial crises. Millions of jobs are lost as a result, and this occurs globally and disproportionately.
Practical Implications: The study offers a variety of results that have significant policy implications for reducing the consequences of financial crises among counties.
Originality/value: The research adds to the corpus of knowledge by supporting the critical discussion on how the financial crisis affects social equality.

Keywords

Economic crisis, income, wealth distribution, inequalities.

Supporting Institution

University of Medical Sciences & Technology (UMST)

Impact of financial crises on social equality among countries: A systematic review

Abstract

The study aims to assess the impact of financial crisis on social equality, in terms of income and wealth distribution, across countries. Specifically, it covers the implications of the great depression, the global financial crisis on both developing and developed nations. A qualitative research approach was adopted with the intention of synthesizing the relevant literature to collect the secondary data. Furthermore, semi-structured interviews were used to gather the primary data and were analyzed using thematic content analysis. Study findings indicate that there are numerous variables, which vary from country to country, that affect how the global financial crisis has affected the distribution of income and wealth among countries. The wealth gap between the rich and the poor in developed economies has lately reached its largest point. Even while there are still significant disparities in access to resources like money, healthcare and education, inequality has lessened in some of these nations and is more diversified in developing ones. Both developed and developing countries suffer when trade, commerce, and government spending are slashed during financial crises. Millions of jobs are lost as a result, and this occurs globally and disproportionately. Furthermore, a conceptual framework has emerged upon the concise review of the existing literature, to draw attention to the consequent effects of the global financial crisis on social equality among countries. The study also provides a variety of results that adds to the corpus of knowledge, and have a significant policy implications for reducing the consequent effects of financial crises among counties.

Keywords

Economic crisis, income, wealth distribution, inequalities.

References

• Anghel, B., et al. E. (2018). Income, consumption and wealth inequality in Spain. SERIEs, 9(4), 351–387. https://doi.org/10.1007/s13209-018-0185-1
• Arestis et al. (2016). Income Inequality: Implications and relevant economic policies. 63(1), 1–24. https://doi.org/10.2298/PAN1601001A
• Baeten, L. (2016). The effects of financial crises on income inequality: Evidence in the long run of history. Rotterdam: Erasmus School of Economics.1–41.
• Belabed, C. A. (2015). Income distribution and the great depression, IMK Working Paper.1–35.
• Bodea, C., Houle, C., & Kim, H. (2021). Do financial crises increase income inequality? World Development, 147, 105635. https://doi.org/10.1016/j.worlddev.2021.105635
• Bordo, M. D., & Meissner, C. M. (2012). Journal of International Money Does inequality lead to a financial crisis? Journal of International Money and Finance, 31(8), 2147–2161. https://doi.org/10.1016/j.jimonfin.2012.05.006
• Brancatelli, C. et al. (2022). Measuring income and wealth effects on private-label demand with matched administrative data. Marketing Science, 41(3), 637-656.
• Caminada, K.et al. (2018). Income inequality and fiscal redistribution in 31 countries after the crisis. Comparative Economic Studies, 0123456789. https://doi.org/10.1057/s41294-018-0079-z
• CarataÈ, M. A. et al. (2019). Triggers of the economic crisis. Vidius University Annals, Economic Sciences Series, 2(19), 237–241.
• Černiauskas, N.et al. (2022). Income inequality and redistribution in Lithuania: The role of policy, labor market, income, and demographics. Review of Income and Wealth, 68, S131-S166, https://doi.org/10.1111/roiw.12546
• Colciago et al. (2019). Central Bank policies and income and wealth inequality: A survey. Journal of Economic Surveys, 33(4), 1–33. https://doi.org/10.1111/joes.12314
• De Lucia, C. et al. (2022). Economics and engineering of unpredictable events: Modelling, planning and policies (Nick Hanley (ed.)). Routledge.
• Deaton, A., Gornick, J., Novokmet, F., & Segal, P. (2021). After the financial crisis: The evolution of the global income distribution between 2008 and 2013. 0. https://doi.org/10.1111/roiw.12516 DINC et al. (2011). Causes and effects of economic crisis in history. African Journal of Business Management, 5(26). https://doi.org/10.5897/ajbm10.1667
• Domanski, D., & Zabai, A. (2016). Wealth inequality and monetary policy. BIS Quarterly Review March.45–64.
• Eigner, P., & Umlauft, T. S. (2015). The Great Depression(s) of 1929-1933 and 2007-2009? parallels, differences and policy lessons. Hungarian Academy of Science MTA-ELTE Crisis History Working Paper, 1(2), 1–53.
• Franko, W. W. (2021). How state responses to economic crisis shape income inequality and financial well-being. State Politics & Policy Quarterly, 21(1), 31–54. https://doi.org/10.1177/1532440020919806 Fukuda-parr, S.,et al. (2014). Critical perspectives on financial and economic crises: Heterodox Macroeconomics Meets Feminist Economics. December, 37–41. https://doi.org/10.1080/13545701.2013.806990 Fuller et al. (2019). Housing prices and wealth inequality in Western Europe. West European Politics, 43(2), 1–24. https://doi.org/10.1080/01402382.2018.1561054
• Gevorkyan, A. (2015.). Economic crisis. Wiley Encyclopedia of Management,1–8. https://doi.org/10.1002/9781118785317.weom060061
• Ghandour, D, A. (2021). "The socioeconomic impacts and implications of the COVID-19 Pandemic and Omicron variant: The case of Sudan." International Journal of Development and Economic Sustainability 9, no. 3 (2021): 36-56.
• Goda, T., & Stockhammer, E. (2016). Income inequality and wealth concentration in the recent crisis. Development and Change, 48(1), 3-27.
• Gokmen, G., & Morin, A. (2019). Inequality in the aftermath of financial crises: Some empirical evidence. Applied Economics Letters, 26(19), 1558-1562, https://doi.org/10.1080/13504851.2019.1584366
• Grabka, M. M. (2015). Income and wealth inequality after the financial crisis: The case of Germany. https://doi.org/10.1007/s10663-015-9280-8
• Greenglass, E., et al. (2014). Journal of Behavioral and Experimental Economics The financial crisis and its effects: Perspectives from economics and psychology. Journal of Behavioral and Experimental Economics, 50, 10–12. https://doi.org/10.1016/j.socec.2014.01.004
• Hertati, L. et al. (2020). The effects of economic crisis on business finance. International Journal of Economics and Financial Issues, 10(3), 236–244. https://doi.org/https://doi.org/10.32479/ijefi.9928
• Holt, R. P. F., & Greenwood, D. T. (2012). Negative Trickle-Down and the financial crisis of 2008. XLV(2), 363–370. https://doi.org/10.2753/JEI0021-3624460211
• Illés, S., & Kincses, Á. (2020). Effects of economic crisis on international circulators to Hungary. Sociology and Anthropology, 6(5), 465–477. https://doi.org/10.13189/sa.2018.060503
• Kuhn, M., & Schularick, M. (2020). Income and wealth inequality in America, 1949–2016. Journal of Political Economy, 128(9), 3469-3519
• Kumhof, M., Rancière, R., & Winant, P. (2015). Inequality, leverage, and crises †. 105(3), 1217–1245.
• Lanchimba, et al. (2020). The COVID-19 Pandemic: Theoretical scenarios of its socioeconomic impacts in Latin America and the Caribbean. Brazilian Journal of Political Economy, 40(4), 622–646. https://doi.org/10.1590/0101-31572020-3199
• Magoulios et al. (2015). The economic crisis (2008) and effects on income. The case of Greece. Procedia Economics and Finance, 19, 27-36, https://doi.org/10.1016/S2212-5671(15)00005-2
• Milanovic, B. (2022). After the financial crisis: the evolution of the global income distribution between 2008 and 2013. Review of Income and Wealth, 68(1), 43-73, https://doi.org/10.1111/roiw.12516
• Naudé, W. (2009). "WIDER Discussion Paper 2009/01 The Financial Crisis of 2008 and the Developing Countries".
• NIKOLIĆ et al. (2013). The effects of economic crisis. Fascicle of Management and Technological Engineering
• Parisi, M. L. & Mussida, C., (2016). The effect of economic crisis on regional income inequality in Italy. Università Cattolica del Sacro Cuore-DISCE, (1614) https://doi.org/10.13140/RG.2.2.21555.84006 Pfeffer et al. (2021). The wealth inequality of nations. American Sociological Review, 86(4), 1–36. https://doi.org/10.1177/00031224211027800
• Sakellaropoulos, S. (2019). The international economic crisis. 1–21. https://doi.org/10.1007/978-3-030-14319-0 Sayed, A., & Peng, B. (2021). Pandemics and income inequality: A historical review. SN Business & Economics, 1(4), 1–17. https://doi.org/10.1007/s43546-021-00059-4
• Stockhammer, E. (2013). Rising inequality as a cause of the present crisis. June 2011, 1–24. https://doi.org/10.1093/cje/bet052
• Stockhammer, E., & Wildauer, R. (2015). Debt-driven growth? Wealth, distribution and demand in OECD countries. September 2014, 1–26. https://doi.org/10.1093/cje/bev070
• Treeck, T. Van. (2013). Did inequality cause the U.S. financial crisis? 00(0), 1–28. https://doi.org/10.1111/joes.12028
• Tridico, P. (2018). The determinants of income inequality in OECD countries. Cambridge Journal of Economics, 42(4), 1–34. https://doi.org/10.1093/cje/bex069
• Yixiao, Z. (2020). COVID-19 Pandemic and its impact on the global economy: What does it take to turn crisis into opportunity? China & World Economy, 28(4), 1–25. https://doi.org/10.1111/cwe.12349