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Financial Development, Financial Instability and Poverty

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  • Sylviane Guillaumont Jeanneney
  • Kangni Kpodar

Abstract

This article investigates how financial development is beneficial to the reduction of poverty, on the one hand by promoting growth and on the other hand directly by the McKinnon conduit effect. At the same time, however, financial instability which accompanies financial development is detrimental to the poor and dampens the positive effect of financial development on the reduction of poverty. These hypotheses are tested successfully on a sample of developing countries over the period 1966-2000, resulting in straightforward policy implications.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2005-09.

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Date of creation: 01 Oct 2005
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Handle: RePEc:oxf:wpaper:wps/2005-09

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