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How has financial deepening affected poverty reduction in India? Empirical analysis using state-level panel data

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  • Takeshi Inoue
  • Shigeyuki Hamori

Abstract

This article examines, empirically, whether financial deepening has contributed to poverty reduction in India. Using unbalanced panel data for 28 Indian states and union territories covering seven time periods (1973, 1977, 1983, 1987, 1993, 1999 and 2004), we empirically analyse whether financial deepening has any effect on poverty. Empirical results clearly indicate that financial deepening significantly decreases poverty, controlling for international openness, inflation rate and economic growth. These results are robust to changes in the poverty ratios in rural areas, urban areas and the whole economy.

Suggested Citation

  • Takeshi Inoue & Shigeyuki Hamori, 2012. "How has financial deepening affected poverty reduction in India? Empirical analysis using state-level panel data," Applied Financial Economics, Taylor & Francis Journals, vol. 22(5), pages 395-408, March.
  • Handle: RePEc:taf:apfiec:v:22:y:2012:i:5:p:395-408
    DOI: 10.1080/09603107.2011.613764
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    Cited by:

    1. Alessandra Cepparulo & Juan Carlos Cuestas & Maurizio Intartaglia, 2017. "Financial development, institutions, and poverty alleviation: an empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 49(36), pages 3611-3622, August.
    2. Ho, Sin-Yu & Njindan Iyke, Bernard, 2017. "Does Financial Development Lead to Poverty Reduction in China? Time Series Evidence," MPRA Paper 78922, University Library of Munich, Germany.
    3. Aïssata COULIBALY & Urbain Thierry YOGO, 2016. "Access to Financial Services and Working Poverty in Developing Countries," Working Papers 201620, CERDI.
    4. repec:jfr:ijfr11:v:8:y:2017:i:4:p:90-98 is not listed on IDEAS
    5. 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.
    6. 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.
    7. Uddin, Gazi Salah & Shahbaz, Muhammad & Arouri, Mohamed & Teulon, Frédéric, 2014. "Financial development and poverty reduction nexus: A cointegration and causality analysis in Bangladesh," Economic Modelling, Elsevier, vol. 36(C), pages 405-412.
    8. Ijaz Rehman & Muhammad Shahbaz, 2014. "Multivariate-based Granger causality between financial deepening and poverty: the case of Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(6), pages 3221-3241, November.
    9. Madhu Sehrawat & A. K. Giri, 2016. "Financial development, poverty and rural-urban income inequality: evidence from South Asian countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(2), pages 577-590, March.
    10. Yaya Keho, 2016. "Revisiting the Financial Development and Poverty Reduction Nexus for Sub-Saharan African Countries: Evidence from Causality Tests in the Time and Frequency Domains," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1906-1910.
    11. Taofeek Olusola Ayinde & Olumuyiwa Ganiyu Yinusa, 2016. "Financial Development and Inclusive Growth in Nigeria: A Threshold Analysis," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(4), pages 326-346, October.
    12. repec:dug:actaec:y:2016:i:5:p:166-189 is not listed on IDEAS
    13. Inoue, Takeshi & Hamori, Shigeyuki, 2011. "Financial permeation as a role of microfinance : has microfinance actually been helpful to the poor?," IDE Discussion Papers 299, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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