Advanced Search
MyIDEAS: Login to save this article or follow this journal

The Casual Nexus of Banking Sector Development and Poverty Reduction in Bangladesh

Contents:

Author Info

  • Gazi Salah Uddin

    (Department of Economics, CarletonUniversity,1125 Colonel By Drive, Ottawa, Ontario, Canada.)

  • Phouphet Kyophilavong

    (Faculty of Economics and Business Management,National University of Laos,)

  • Nasim Sydee

    (Policy Analyst, Labour Program,Human Resources and Skills Development Canada,)

Abstract

The paper aims to investigate the inter-temporal causal relationship between banking sector development and poverty reduction in Bangladesh from 1976 to 2010. We have applied new methods using modern time series econometrics techniques based on simulations that are robust to the violation of statistical assumptions, especially when the sample size is small, as is the case in this paper. The results reveal that there is a long-term equilibrium relationship between banking sector development and poverty reduction in the case of Bangladesh. Surprisingly, poverty reduction appears to be a long-term forcing variable to the explanation of Bangladesh’s banking sector development. There is bidirectional causality between these variables. The diagnostic tests show that the underlying desirable assumptions are fulfilled. Time series data on poverty in many developing countries, particularly in Bangladesh, is scant and inadequate. The empirical results of this study will help policy makers determine whether poverty reduction in Bangladesh is a spur to financial sector development. This implies that, in the long term, Bangladeshi policy makers can influence the reduction of poverty through financial sector development. Although several attempts have been made to investigate the relationship between financial development and growth, this paper is the first of its kind to empirically examine the causal relationship between poverty and the development of the banking sector in Bangladesh.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.econjournals.com/index.php/ijefi/article/download/221/pdf
Download Restriction: no

File URL: http://www.econjournals.com/index.php/ijefi/article/view/221/pdf
Download Restriction: no

Bibliographic Info

Article provided by Econjournals in its journal International Journal of Economics and Financial Issues.

Volume (Year): 2 (2012)
Issue (Month): 3 ()
Pages: 304-311

as in new window
Handle: RePEc:eco:journ1:2012-03-8

Contact details of provider:
Web page: http://www.econjournals.com

Related research

Keywords: Poverty; Banking Sector Development; Cointegration; Error Correction; ARDL Bounds Testing; Bangladesh;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Sylviane GUILLAUMONT JEANNENEY & Kangni KPODAR, 2004. "Développement financier, instabilité financière et réduction de la pauvreté," Working Papers 200429, CERDI.
  2. Beck, T.H.L. & Demirgüç-Kunt, A. & Levine, R., 2007. "Finance, inequality and the poor," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125426, Tilburg University.
  3. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Dollar, David & Kraay, Aart, 2002. " Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
  5. Levine, Ross & Loayza, Norman & Beck, Thorsten, 2000. "Financial intermediation and growth: Causality and causes," Journal of Monetary Economics, Elsevier, vol. 46(1), pages 31-77, August.
  6. Honohan, P. & Beck, T.H.L., 2007. "Making finance work for Africa," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125420, Tilburg University.
  7. anonymous, 1997. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Dec.
  8. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  9. Odhiambo, Nicholas M., 2009. "Energy consumption and economic growth nexus in Tanzania: An ARDL bounds testing approach," Energy Policy, Elsevier, vol. 37(2), pages 617-622, February.
  10. anonymous, 1997. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Jun.
  11. Philip Arestis & Asena Caner, 2009. "Financial liberalization and the geography of poverty," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 2(2), pages 229-244.
  12. Paresh Kumar Narayan & Russell Smyth, 2006. "Higher Education, Real Income and Real Investment in China: Evidence From Granger Causality Tests," Education Economics, Taylor & Francis Journals, vol. 14(1), pages 107-125.
  13. Sylviane Guillaumont Jeanneney & Kangni Kpodar, 2011. "Financial Development and Poverty Reduction: Can There be a Benefit without a Cost?," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 143-163.
  14. Sylviane Guillaumont Jeanneney & Kangni Kpodar, 2005. "Financial Development, Financial Instability and Poverty," Economics Series Working Papers WPS/2005-09, University of Oxford, Department of Economics.
  15. Shenggen Fan & Peter Hazell & Sukhadeo Thorat, 2000. "Government Spending, Growth and Poverty in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 1038-1051.
  16. Clarke, George & Xu, Lixin Colin & Zou, Heng-fu, 2003. "Finance and income inequality : test of alternative theories," Policy Research Working Paper Series 2984, The World Bank.
  17. Ingrid Woolard & Murray Leibbrandt, 1999. "Measuring Poverty in South Africa," Working Papers 99033, University of Cape Town, Development Policy Research Unit.
  18. anonymous, 1997. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Mar.
  19. Odhiambo, Nicholas M., 2009. "Finance-growth-poverty nexus in South Africa: A dynamic causality linkage," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(2), pages 320-325, March.
  20. anonymous, 1997. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue May.
  21. Narayan, Paresh Kumar & Smyth, Russell, 2008. "Energy consumption and real GDP in G7 countries: New evidence from panel cointegration with structural breaks," Energy Economics, Elsevier, vol. 30(5), pages 2331-2341, September.
  22. Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
  23. anonymous, 1997. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Sep.
  24. anonymous, 1997. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Nov.
  25. anonymous, 1997. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Aug.
  26. Subrata Ghatak & Jalal Siddiki, 2001. "The use of the ARDL approach in estimating virtual exchange rates in India," Journal of Applied Statistics, Taylor & Francis Journals, vol. 28(5), pages 573-583.
  27. Philip Arestis & Asena Caner, 2004. "Financial Liberalization and Poverty: Channels of Influence," Economics Working Paper Archive wp_411, Levy Economics Institute.
  28. Morley, Bruce, 2006. "Causality between economic growth and immigration: An ARDL bounds testing approach," Economics Letters, Elsevier, vol. 90(1), pages 72-76, January.
  29. anonymous, 1997. "Western economic developments," Western economic developments, Federal Reserve Bank of San Francisco, issue Jan.
  30. Patrick Honohan, 2004. "Financial development, growth, and poverty: how close are the links?," Policy Research Working Paper Series 3203, The World Bank.
  31. Nicholas Odhiambo, 2007. "Supply‐leading versus Demand‐following Hypothesis: Empirical Evidence from Three SSA Countries," African Development Review, African Development Bank, vol. 19(2), pages 257-280.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Shahbaz, Muhammad & Ur Rehman, Ijaz, 2013. "Multivariate–Based Granger Causality between Financial Deepening and Poverty: The Case of Pakistan," MPRA Paper 50834, University Library of Munich, Germany, revised 20 Oct 2013.
  2. A. Nurul Hossain & Syed Hasanuzzaman, 2013. "Remittances and investment nexus in Bangladesh: an ARDL bounds testing approach," International Review of Economics, Springer, vol. 60(4), pages 387-407, December.
  3. Abdelhafidh Dhrifi, 2013. "Financial Development and Poverty: What Role for Growth and Inequality?," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(4), pages 119-129, October.
  4. Uddin, Gazi Salah & Shahbaz, Muhammad & Arouri, Mohamed & Teulon, Frédéric, 2014. "Financial development and poverty reduction nexus: A cointegration and causality analysis in Bangladesh," Economic Modelling, Elsevier, vol. 36(C), pages 405-412.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2012-03-8. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilhan Ozturk).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.