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Does financial structure matter for poverty?

Author

Listed:
  • Kangni Kpodar

    (FMI - International Money Fund)

  • Raju Jan Singh

    (Banque Mondiale - Banque Mondiale - Banque Mondiale)

Abstract

Although there has been research looking at the relationship between the structure of the financial system and economic growth, much less work has dealt with the importance of bank-based versus market-based financial systems for poverty and income distribution. Empirical evidence has indicated that the structure of the financial system has little relevance for economic growth, suggesting that the same could be true for poverty since growth is an important driver in reducing poverty. Some theories, however, claim that, by reducing information and transaction costs, the development of bank-based financial systems could exert a particularly large impact on the poor. This paper looks at a sample of 47 developing economies from 1984 through 2008. The results suggest that when institutions are weak, bank-based financial systems are better at reducing poverty and, as institutions develop, market-based financial systems can turn out to be beneficial for the poor.

Suggested Citation

  • Kangni Kpodar & Raju Jan Singh, 2011. "Does financial structure matter for poverty?," Post-Print halshs-00666911, HAL.
    • Handle: RePEc:hal:journl:halshs-00666911
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    Citations

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    Cited by:

    1. Gnangnon, Sèna Kimm, 2020. "Aid for Trade flows and Poverty Reduction in Recipient-Countries," EconStor Preprints 213807, ZBW - Leibniz Information Centre for Economics.
    2. Le Goff, Maelan & Singh, Raju Jan, 2013. "Does trade reduce poverty ? a view from Africa," Policy Research Working Paper Series 6327, The World Bank.
    3. Djeneba Doumbia, 2019. "The quest for pro-poor and inclusive growth: the role of governance," Applied Economics, Taylor & Francis Journals, vol. 51(16), pages 1762-1783, April.
    4. Sena Kimm Gnangnon, 2021. "Poverty volatility and poverty in developing countries," Economic Affairs, Wiley Blackwell, vol. 41(1), pages 84-95, February.
    5. D’Onofrio, Alexandra & Minetti, Raoul & Murro, Pierluigi, 2019. "Banking development, socioeconomic structure and income inequality," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 428-451.
    6. Kore Marc Guei, 2019. "Does financial structure matter for economic growth: evidence from South Africa," Economics Bulletin, AccessEcon, vol. 39(3), pages 1941-1957.
    7. Guanchun Liu & Yuanyuan Liu & Chengsi Zhang, 2017. "Financial Development, Financial Structure and Income Inequality in China," The World Economy, Wiley Blackwell, vol. 40(9), pages 1890-1917, September.
    8. Seven, Unal & Coskun, Yener, 2016. "Does financial development reduce income inequality and poverty? Evidence from emerging countries," Emerging Markets Review, Elsevier, vol. 26(C), pages 34-63.
    9. Thierno Thioune, 2017. "Financial Instability and Inequality Dynamics in the WAEMU," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 2(1), pages 43-62, June.
    10. Sena Kimm Gnangnon, 2021. "Economic complexity and poverty in developing countries," Economic Affairs, Wiley Blackwell, vol. 41(3), pages 416-429, October.
    11. Zhaohua Li & Mohammad Monirul Islam & Farha Fatema, 2017. "Trading for Sustainable Development Goals: Trade Policy, Inequality and Poverty in Emerging Economies," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 7(10), pages 818-838, October.
    12. Lubinga, Moses H., 2016. "The role of agricultural trade and policy complementarities in poverty reduction in South Africa," NAMC Publications 253094, National Agricultural Marketing Council.
    13. Sèna Kimm Gnangnon, 2021. "Exchange rate pressure, fiscal redistribution and poverty in developing countries," Economic Change and Restructuring, Springer, vol. 54(4), pages 1173-1203, November.
    14. Liu, Guanchun & Zhang, Chengsi, 2020. "Does financial structure matter for economic growth in China," China Economic Review, Elsevier, vol. 61(C).
    15. James Temitope Dada & Taiwo Akinlo, 2021. "Foreign direct investment and poverty reduction in sub-Saharan Africa: does environmental degradation matter?," Future Business Journal, Springer, vol. 7(1), pages 1-10, December.

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