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Financial development, institutions, and poverty alleviation: an empirical analysis

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  • Alessandra Cepparulo
  • Juan Carlos Cuestas
  • Maurizio Intartaglia

Abstract

The aim of this article is to analyse empirically whether the level of institutional quality influences how financial development affects poverty for a sample of developing countries covering the period from 1984 to 2012. Using an interaction term constructed as a product between financial development and institutional quality we find that the pro-poor impact of financial development decreases as the quality of institutions rises. Such a differential effect can be ascribed to the capacity of banks to provide functions that mimic those performed by an institutional framework that works well. The results of this article can be used for policy management.

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  • 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.
  • Handle: RePEc:taf:applec:v:49:y:2017:i:36:p:3611-3622
    DOI: 10.1080/00036846.2016.1265074
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    Cited by:

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    5. Singh, Sunny & Jha, Chandan, 2021. "Are Financial Development and Financial Stability Complements or Substitutes in Poverty Reduction?," MPRA Paper 111615, University Library of Munich, Germany.
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    11. Fisayo Fagbemi & Babafemi Oladejo & Opeoluwa A. Adeosun, 2020. "The Effectiveness of Poverty Alleviation Policy: Why is the Quality of Institutions the Bane in Nigeria?," Working Papers of the African Governance and Development Institute. 20/099, African Governance and Development Institute..
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    13. Muhammad Akbar & Abdullah & Amjad Naveed & Shabib Haider Syed, 2022. "Does an Improvement in Rural Infrastructure Contribute to Alleviate Poverty in Pakistan? A Spatial Econometric Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 162(1), pages 475-499, July.
    14. Dong, Kangyin & Taghizadeh-Hesary, Farhad & Zhao, Jun, 2022. "How inclusive financial development eradicates energy poverty in China? The role of technological innovation," Energy Economics, Elsevier, vol. 109(C).
    15. Nasreddine Kaidi & Sami Mensi & Mehdi Ben Amor, 2019. "Financial Development, Institutional Quality and Poverty Reduction: Worldwide Evidence," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(1), pages 131-156, January.
    16. Alshubiri, Faris, 2021. "Financial deepening indicators and income inequality of OECD and ASIAN countries," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).
    17. Fisayo Fagbemi & Babafemi Oladejo & Opeoluwa A. Adeosun, 2020. "The Effectiveness of Poverty Alleviation Policy: Why is the Quality of Institutions the Bane in Nigeria?," Research Africa Network Working Papers 20/099, Research Africa Network (RAN).
    18. Fisayo Fagbemi & Babafemi Oladejo & Opeoluwa Adeniyi Adeosun, 2020. "The Effectiveness of Poverty Alleviation Policy: Why Is the Quality of Institutions the Bane in Nigeria?," Review of Development and Change, , vol. 25(2), pages 215-236, December.
    19. Nasreddine Kaidi & Sami Mensi, 2018. "Financial Development and Poverty Reduction: A Study of Middle-Income Countries," Working Papers 1216, Economic Research Forum, revised 05 Sep 2018.
    20. Jakob Haan & Regina Pleninger & Jan-Egbert Sturm, 2022. "Does Financial Development Reduce the Poverty Gap?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 161(1), pages 1-27, May.

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    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • I2 - Health, Education, and Welfare - - Education
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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