Financial development, institutions, and poverty alleviation: an empirical analysis

Cepparulo, Alessandra; Cuestas, Juan Carlos; Intartaglia, Maurizio

doi:10.1080/00036846.2016.1265074

Cited by 45 publications

(25 citation statements)

References 31 publications

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“…However, Kiendrebeogo and Minea (2016) report that financial instability increases poverty in their panel estimates for CFA Franc Zone countries, thereby counteracting the direct poverty reducing effect of financial development. Cepparulo et al (2017) use both cross-section and panel estimates for up to 58 countries over the period 1984-2012. They show that financial development (proxied by the ratios of private credit, M3 and bank assets to GDP) reduces headcount poverty but less so if institutional quality is high.…”

Section: Previous Studiesmentioning

confidence: 99%

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Does Financial Development Reduce the Poverty Gap?

2021

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Financial development may affect poverty directly and indirectly through its impact on income inequality, economic growth, and financial instability. Previous studies do not consider all these channels simultaneously. To proxy financial development, we use the ratio of private credit to GDP or an IMF composite measure. Our preferred measure for poverty is the poverty gap, i.e. the shortfall from the poverty line. Our fixed effects estimation results for an unbalanced panel of 84 countries over the 1975–2014 period suggest that financial development does not have a direct effect on the poverty gap. However, as financial development leads to greater inequality, which, in turn, results in more poverty, financial development has an indirect effect on poverty through this transmission channel. Only if we use poverty lines of $3.20 or $5.50 (instead of $1.90 a day as in our baseline model) to define the poverty gap, we find that economic growth reduces poverty. This implies that in those cases the overall effect of financial development on poverty may be positive or negative, depending on which indirect effect, i.e. that of income inequality or growth, is stronger. Financial instability does not seem to affect the poverty gap. These results are consistent across various robustness checks.

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Section: Previous Studiesmentioning

confidence: 99%

“…We prefer using a large panel of countries with 5-year averages. Except for Seven and Coskun (2016), Cepparulo et al (2017), and Rashid and Intartaglia (2017), previous panel studies employ annual data. We use five-year non-overlapping averages for three reasons (see also Dabla-Norris et al, 2015;de Haan & Sturm, 2017).…”

Section: Previous Studiesmentioning

confidence: 99%

Does Financial Development Reduce the Poverty Gap?

2021

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“…There is a clear link between economic growth, poverty alleviation and the degree of development of the financial sector (e.g. Cepparulo et al (2017)).…”

Section: Introductionmentioning

confidence: 99%

Does internationalisation increase exchange rate exposure? -Evidence from Chinese financial firms

Cuestas

Huang

Tang

2018

International Review of Financial Analysis

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This study investigates both the symmetric and asymmetric exchange rate exposures of Chinese financial firms in the context of an accelerated pace of RMB internationalisation. We find that an increasing number of Chinese financial firms are exposed to negative symmetric effects from the change in the trade weighted effective exchange rate. The evidence concerning asymmetries shows that after 2009 negative exchange rate shocks (a weaker RMB) have a stronger effect on exposures than positive shocks(a stronger RMB). Changes in the bilateral exchange rate also have a significant impact on firm returns, given the importance of the USD in the effective exchange rate. Further, the empirical analysis reveals that exchange rate exposures are associated with firm level characteristics including total assets, earnings per share, net cash flows, investment incomes, total liabilities and firm size. Finally, we suggest that domestic and foreign stakeholders need to pay close attention to the movement of the Yuan's exchange rate before it becomes completely convertible.

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“…More recently, Cepparulo et al (2016) analysed whether institutional quality determined how financial development influences poverty, for some developing countries over the period 1984–2012. Using an interaction term of financial development and governance quality, they found that the poverty-reduction effect of financial development adjusts with increased institutional quality.…”

Section: Literature Reviewmentioning

confidence: 99%

The Effectiveness of Poverty Alleviation Policy: Why Is the Quality of Institutions the Bane in Nigeria?

Fagbemi

Oladejo

Adeosun

2020

Review of Development and Change

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This article examines the nexus between the quality of institutions and the poverty in Nigeria over the period 1984–2017, using dynamic least squares, canonical cointegrating regression and vector error correction mechanisms. The analysis based on three institutional measures (bureaucratic quality, democratic accountability and rule of law) reveals how the poverty rate could be escalated by entrenched poor governance. The evidence shows that democratic accountability and rule of law are significant for poverty reduction. This reinforces the assertion that accountability and transparency coupled with strict adherence to rule of law in the public sector are the principal components of poverty alleviation. Also, findings reveal that poverty and weak institutions are interconnected and mutually reinforcing in the country. Overall, the findings posit that poverty is widespread in Nigeria due to capacity constraints of public institutions or underlying governance practices. By implication, the article suggests that policymakers should focus on measures that have the greatest leverage for enhancing effective governance oriented towards poverty reduction and development. In addition, tackling socio-economic inequalities, curbing political unrest and building strong institutions are central to ensuring a socially sustainable basis for holistic welfare improvements.

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Financial development, institutions, and poverty alleviation: an empirical analysis

Cited by 45 publications

References 31 publications

Does Financial Development Reduce the Poverty Gap?

Does Financial Development Reduce the Poverty Gap?

Does internationalisation increase exchange rate exposure? -Evidence from Chinese financial firms

The Effectiveness of Poverty Alleviation Policy: Why Is the Quality of Institutions the Bane in Nigeria?

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