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Financial Development and Poverty Reduction

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  • Sylviane Guillaumont Jeanneney
  • Kangni Kpodar

Abstract

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.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/62.

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Length: 36
Date of creation: 01 Mar 2008
Date of revision:
Handle: RePEc:imf:imfwpa:08/62

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Keywords: Poverty; Poverty reduction; Economic growth; Financial stability; Development financing; financial instability; gdp per capita; bond; growth rate; per capita income; financial system; financial intermediation; financial systems; real gdp; financial liberalization; financial intermediaries; financial markets; financial sector; financial reform; gdp growth; financial services; financial institutions; financial repression; financial sector development; deposit money banks; savings deposits; gdp growth rate; nominal exchange rate; growth model; deposit money; national income; financial deregulation; international financial statistics; per capita income growth; financial structure; liquid liabilities; reserve requirements; financial economics; currency crises;

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