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Financial Development and the "Growth-Inequality-Poverty" Triangle

Listed author(s):
  • Abdelhafidh Dhrifi

    ()

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    The main objective of this paper is to study the effects of financial development on poverty reduction taking into account the simultaneous effects on growth and inequality. In order to do so, we decided to make a comparative study between three groups of countries according to the chosen criterion income. We are going to build a model of simultaneous equations over the period of 1990–2010. The results generated by this study have identified that financial development promotes economic growth and reduce poverty in middle- and high-income countries; whereas in low-income countries, financial system does not have a positive effect on these economies. The study showed also that financial development exacerbates inequality of income distribution in countries with low and middle income; whereas for high-income countries, any improvement in the financial system resulted in a decrease in inequality. Copyright Springer Science+Business Media New York 2015

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    File URL: http://hdl.handle.net/10.1007/s13132-014-0200-0
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    Article provided by Springer & Portland International Center for Management of Engineering and Technology (PICMET) in its journal Journal of the Knowledge Economy.

    Volume (Year): 6 (2015)
    Issue (Month): 4 (December)
    Pages: 1163-1176

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    Handle: RePEc:spr:jknowl:v:6:y:2015:i:4:p:1163-1176
    DOI: 10.1007/s13132-014-0200-0
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    1. Odhiambo, Nicholas M., 2009. "Finance-growth-poverty nexus in South Africa: A dynamic causality linkage," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(2), pages 320-325, March.
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    5. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
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    7. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
    8. Vassili Prokopenko & Paul Holden, 2001. "Financial Development and Poverty Alleviation; Issues and Policy Implications for Developing and Transition Countries," IMF Working Papers 01/160, International Monetary Fund.
    9. Gazi Salah Uddin & Phouphet Kyophilavong & Nasim Sydee, 2012. "The Casual Nexus of Banking Sector Development and Poverty Reduction in Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 2(3), pages 304-311.
    10. Ingrid Woolard & Murray Leibbrandt, 1999. "Measuring Poverty in South Africa," Working Papers 99033, University of Cape Town, Development Policy Research Unit.
    11. Quartey, Peter, 2005. "Financial Sector Development, Savings Mobilization and Poverty Reduction in Ghana," WIDER Working Paper Series 071, World Institute for Development Economic Research (UNU-WIDER).
    12. Deininger, Klaus & Squire, Lyn, 1996. "A New Data Set Measuring Income Inequality," World Bank Economic Review, World Bank Group, vol. 10(3), pages 565-591, September.
    13. Mattias Lundberg & Lyn Squire, 2003. "The simultaneous evolution of growth and inequality," Economic Journal, Royal Economic Society, vol. 113(487), pages 326-344, 04.
    14. Philippe Aghion & Patrick Bolton, 1997. "A Theory of Trickle-Down Growth and Development," Review of Economic Studies, Oxford University Press, vol. 64(2), pages 151-172.
    15. Datt, Gaurav & Ravallion, Martin, 1992. "Growth and redistribution components of changes in poverty measures : A decomposition with applications to Brazil and India in the 1980s," Journal of Development Economics, Elsevier, vol. 38(2), pages 275-295, April.
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