Lea Tschan
This paper provides empirical evidence for a significant positive association between green finance and top income inequality from a broad panel of countries. This relationship is strongest for countries with low GDP or low levels of financial development. Moreover, we find evidence for a significant positive long term effect on inequality that persists for more than five years. We argue that the association between green finance and inequality is at least partially driven by an innovation channel. Using a moderated mediation setup, we show that innovation is mediating the positive relationship between green finance and top income inequality.