Size of finance and inequality

We are interested in the link between the size of finance and income inequality. Like in the case of the link between the size of finance and growth, we expect to see different effects depending on whether the financial sector is large or small. If the financial sector is small, an increase in the size of finance may reduce inequality by allowing more efficient investment to be made, thereby increasing the distribution of income in favour of the poor est ; But if the financial sector is large, an increase in the size of finance may increase inequality, first because jobs in finance offer very high pay, but also because financial development may increase the size of asset markets and capital income. We therefore compare the size of finance and income inequality befor e redistribution for both emerging countries and OECD countries. We find a highly counterintuitive result: the correlation between the size of finance and inequality is positive in emerging countries and negative in OECD countries. This is the opposite of what we expected initially .