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Financial Deepening, Property Rights, and Poverty: Evidence from Sub-Saharan Africa

Author

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  • Raju Jan Singh

    () (The World Bank, United States)

  • Yifei Huang

    () (GMO, United States)

Abstract

Recent studies on the relationship between financial development and poverty have been inconclusive. Some claim that, by allowing more entrepreneurs to obtain financing, financial development improves the allocation of capital, which has a particularly large impact on the poor. Others argue that it is primarily the rich and politically connected who benefit from improvements in the financial system. This paper looks at a sample of 37 countries in sub-Saharan Africa from 1992 through 2006. Its results suggest that financial deepening could widen income inequality and increase poverty, if not accompanied by stronger property rights. Similarly, interest rate and lending liberalization alone could be detrimental to the poor without institutional reforms, in particular stronger property rights and wider access to credit information.

Suggested Citation

  • Raju Jan Singh & Yifei Huang, 2015. "Financial Deepening, Property Rights, and Poverty: Evidence from Sub-Saharan Africa," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(3), pages 130-151, May.
  • Handle: RePEc:sgm:jbfeuw:v:1:y:2015:i:3:p:130-151
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    References listed on IDEAS

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    1. Greenwood, Jeremy & Jovanovic, Boyan, 1990. "Financial Development, Growth, and the Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1076-1107, October.
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    10. Raju Jan SINGH, 1997. "Banks, Growth And Geography," UNCTAD Discussion Papers 127, United Nations Conference on Trade and Development.
    11. Sylviane Guillaumont Jeanneney & Kangni Kpodar, 2011. "Financial Development and Poverty Reduction: Can There be a Benefit without a Cost?," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 143-163.
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    Citations

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    Cited by:

    1. Ernesto M. Pernia & Janine Elora M. Lazatin, 2016. "Do Regions Gain from an Open Economy?," UP School of Economics Discussion Papers 201602, University of the Philippines School of Economics.
    2. Kpodar, Kangni & Singh, Raju Jan, 2011. "Does financial structure matter for poverty ? evidence from developing countries," Policy Research Working Paper Series 5915, The World Bank.
    3. Singh,Raju & Huang,Yifei, 2016. "Financial channels, property rights, and poverty : a Sub-Saharan African perspective," Policy Research Working Paper Series 7559, The World Bank.
    4. Raju Jan Singh & Yifei Huang, 2016. "Financial Channels, Property Rights and Poverty: A Sub-Saharan African Perspective This work was initiated when Raju Jan Singh was a Senior Economist and Yifei Huang a summer intern at the African Dep," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 45(3), pages 327-351, November.
    5. Franklin Obeng-Odoom, 2013. "The Mystery of Capital or the Mystification of Capital?," Review of Social Economy, Taylor & Francis Journals, vol. 71(4), pages 427-442, December.
    6. Le Goff, Maelan & Singh, Raju Jan, 2013. "Does trade reduce poverty ? a view from Africa," Policy Research Working Paper Series 6327, The World Bank.
    7. 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.

    More about this item

    Keywords

    financial development; poverty alleviation; income distribution; Africa;

    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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