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Financial development and poverty reduction nexus: A cointegration and causality analysis in Bangladesh

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  • Uddin, Gazi Salah
  • Shahbaz, Muhammad
  • Arouri, Mohamed
  • Teulon, Frédéric

Abstract

This paper contributes to the literature by investigating the relationship between financial development, economic growth and poverty reduction in Bangladesh using quarter frequency data over the period of 1975–2011. This issue is of importance for developing economics given the role of financial sector in mobilizing and allocating savings into productive investments. We use an innovative empirical approach based on ARDL cointegration with structural breaks. Our findings show that a long-run relationship between financial development, economic growth and poverty reduction exists in Bangladesh. Financial development helps to reduce poverty, but its effect is not linear.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:405-412
    DOI: 10.1016/j.econmod.2013.09.049
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    More about this item

    Keywords

    Financial development; Economic growth; Poverty;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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