Financial Development and Poverty Reduction: Can There Be a Benefit Without a Cost?

By Sylviane Guillaumont Jeanneney, Kangni R Kpodar

March 1, 2008

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Format: Chicago

Sylviane Guillaumont Jeanneney, and Kangni R Kpodar. Financial Development and Poverty Reduction: Can There Be a Benefit Without a Cost?, (USA: International Monetary Fund, 2008) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This article investigates how financial development helps to reduce poverty directly through the McKinnon conduit effect and indirectly through economic growth. The results obtained with data for a sample of developing countries from 1966 through 2000 suggest that the poor benefit from the ability of the banking system to facilitate transactions and provide savings opportunities but to some extent fail to reap the benefit from greater availability of credit. Moreover, financial development is accompanied by financial instability, which is detrimental to the poor. Nevertheless, the benefits of financial development for the poor outweigh the cost.

Subject: Credit, Financial sector development, Personal income, Poverty, Poverty measurement

Keywords: GDP, Headcount poverty, Poverty gap, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/062
Stock No:

WPIEA2008062
ISBN:

9781451869248
ISSN:

1018-5941

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