Interakcija financijskog razvitka, nejednakosti i rizika od siromaštva u Republici Hrvatskoj

Abstract

This paper examines the financial development of the Republic of Croatia as measured by the dimensions of financialization, financial deepening and financial inclusion through interaction with two dimensions of social exclusion, such as income inequality and at-risk-of-poverty rates. The aim of the paper is to determine how financialization, financial deepening and inclusion affect income inequality and the risk of poverty. In terms of financialization, research has shown that the development of the overall financial sector relative to GDP reduces income inequality and at-risk-of-poverty rates, while the growth of banking sector assets relative to GDP increases income inequality and at-riskof-poverty. With financial deepening, the share of corporate loans in GDP has been shown to increase income inequality and the at-risk-of-poverty rate, while loans to households are not significant for inequality, but therefore reduce the at-risk-of-poverty rate. The share of household loans in GDP is not significant for income inequality, but it reduces the at-risk-of-poverty rate. The financial inclusion of households has shown that the three groups of loans (transaction account overdrafts, cash and other loans) depend on the level of inequality and that the opposite causality operates. While cash loans reduce the atrisk-of-poverty rate, the at-risk-of-poverty rate as an inverse causality affects transaction account overdrafts. Key words: financialization, financial deepening, financial inclusion, income inequality, at-risk-of-poverty rate, Croatia.