Does Financial Development Contribute to Poverty Reduction?

Jalilian, Habib; Kirkpatrick, Colin

doi:10.1080/00220380500092754

Cited by 208 publications

(146 citation statements)

References 26 publications

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“…Financial globalization and the widespread consensus on the positive interplay between growth and development of the financial sector incited scholars to research the influence that improvements within the financial sector have on inequality and poverty. Positions in academic literature have generally suggested that improvements in the financial sector contribute to poverty alleviation (Beck et al, 2004;Jalilian and Kirkpatrick, 2005;Perez-Moreno, 2011;Sehrawat and Giri, 2016). However, the findings on finance-inequality have remained inconclusive.…”

Section: Review Of Empirical Literaturementioning

confidence: 96%

Trade Openness, Inequality and Poverty in Latin American Countries

Bayar¹,

Sart²

2017

ECO

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Abstract. Globalization has quickened, especially during the past three decades, due to technological, institutional, legal and political developments in the world. During this process, many countries reduced or removed the barriers on the cross-country flows of goods, services and capital, and the global trade volume increased substantially. Therefore, openness-oriented policies have led many social and economic implications for the national economies. In this regard, this study investigates the interaction among trade openness, poverty alleviation and inequality in 11 Latin American countries by employing a panel data analysis. We revealed that trade openness and financial development affected inequality and poverty negatively in the long term, while inequality affected poverty positively.

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Section: Review Of Empirical Literaturementioning

confidence: 96%

Trade Openness, Inequality and Poverty in Latin American Countries

Bayar¹,

Sart²

2017

ECO

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“…This argues for the need to expand service provision towards the unbanked and those on low incomes and away from the focus of microfinance on providing financial services to poor people. This shift is supported by research that suggests that the poverty reducing effects of financial sector development on poverty reduction lie mainly through the indirect effects on growth rather than the effects of direct access for poor people to financial services (Beck, et al 2007;Honohan 2007;Jalilian and Kirkpatrick 2005). This argument is further supported by the view that the distinction between microfinance and banking provision has been overdrawn (Honohan 2004), and also by recent shifts of microfinance provision towards individually rather than group-based products, and their transformation into regulated institutions.…”

Section: Inclusive Financial Markets: the Policy Contextmentioning

confidence: 97%

Inclusive Financial Markets: Is Transformation Under Way in Kenya?

Johnson

Arnold

2012

Development Policy Review

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“…One reason for this ambiguity in research is the lack of data and the shortcomings of statistical methods regarding their interpretation and analysis (see Arestis and Demetriades, 1997). Another reason can be seen in the complexity of the relationship itself, as financial development may not only influence inequality and poverty directly, but also indirectly, for instance, via its effect on economic growth (Jalilian and Kirkpatrick, 2005). Figure 1 shows the direct and indirect mechanisms of financial development on poverty and inequality.…”

Section: Literature Backgroundmentioning

confidence: 99%

“…Starting with the indirect impact of financial development on inequality through the economic growth channel, a positive link between financial development and economic growth is widely agreed upon (Goldsmith, 1969;McKinnon, 1973;Shaw, 1973;Bencivenga and Smith, 1991;King and Levine, 1993;Beck et al 2004;Jalilian and Kirkpatrick, 2005). Possible causes for the positive impact of financial development on economic growth are allocation of savings and total factor productivity growth (Schumpeter, 1959) as well as capital allocation (King and Levine, 1993).…”

Section: Figure 1 Financial Development Economic Growth Inequalitymentioning

confidence: 99%

“…His argument is based on both, the assumption that savings are concentrated in the upper-income groups and on labor shifts from low-productivity to high-productivity sectors. Jalilian and Kirkpatrick (2005) take a closer look at financial development, economic growth and poverty, testing for a link between financial development and poverty. Their findings suggest that financial development has a positive impact on growth, especially at low income levels.…”

Section: Figure 1 Financial Development Economic Growth Inequalitymentioning

confidence: 99%

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Finance and Inequality – Evidence from East Asia

Mansour¹,

Wendel²

2015

EJEF

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The economic debate about inequality has occupied a huge place in the scientific discourse of the last decades. Several factors have been identified as causes for the rising wealth and income inequality in various regions such as economic growth, capital return and intergenerational wealth. In this paper, East Asia is chosen as a regional focus for the analysis due to the region's specific characteristics and history regarding inequality. Until the end of the 1980s, the region experienced a period of so-called "growth with equity" where high economic growth rates were associated with decreasing poverty and inequality. In recent years, however, growth in East Asia has gone hand in hand with inequality. This shift from "growth with equity" to "growth with inequality" makes the region worth investigating. The paper focuses particularly on the size of the financial sector, analyzing its role and impact on the development of inequality. Therefore, the theoretical connection and the natural relationship between poverty, inequality, economic growth as well as the size of the financial sector are discussed. Indicators, proxies and measurements for these variables are identified, based on existing literature. The main analysis delivers an answer to the research question of whether and how financial development affects the inequality in a society. For the analysis, cross-country and panel data for the ASEAN+3 countries from 1960-2012 are used.

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Does Financial Development Contribute to Poverty Reduction?

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Cited by 208 publications

References 26 publications

Trade Openness, Inequality and Poverty in Latin American Countries

Trade Openness, Inequality and Poverty in Latin American Countries

Inclusive Financial Markets: Is Transformation Under Way in Kenya?

Finance and Inequality – Evidence from East Asia

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