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Finance, inequality, and poverty: cross-country evidence

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  • Beck, Thorsten
  • Demirguc-Kunt, Asli
  • Levine, Ross

Abstract

While substantial research finds that financial development boosts overall economic growth, the authors study whether financial development is pro-poor: Does financial development disproportionately raise the income of the poor? Using a broad cross-country sample, the authors find that the answer is yes: Financial intermediary development reduces income inequality by disproportionately boosting the income of the poor and therefore reduces poverty. This result is robust to controlling for simultaneity bias and reverse causation.

Suggested Citation

  • Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2004. "Finance, inequality, and poverty: cross-country evidence," Policy Research Working Paper Series 3338, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3338
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    More about this item

    Keywords

    Health Economics&Finance; Payment Systems&Infrastructure; Economic Conditions and Volatility; Economic Theory&Research; Environmental Economics&Policies; Inequality; Economic Theory&Research; Achieving Shared Growth; Health Economics&Finance; Governance Indicators;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • G00 - Financial Economics - - General - - - General

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