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Access to Financial Services and Working Poverty in Developing Countries

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  • Aïssata COULIBALY
  • Urbain Thierry YOGO

Abstract

This paper investigates the effect of access to financial services on the prevalence of working poor. Using a panel of 63 developing countries over the period 2004-2013, we find that improving financial access (as measured by the number of bank branches per 100,000 adults) reduces the prevalence of working poor (workers living with less than US$ 1.25 a day). This effect is even more relevant in countries affected by strong macroeconomic instability. Our findings are robust to endogeneity bias, the addition of various controls including remittances and mobile phone subscriptions, and to the shifting of the poverty line from US$ 1.25 to US$ 1.90. We also show that barriers to use banking services are correlated positively with working poverty. Moreover, our results confirm the validity of some transmissions channels such as growth (trickle-down effect) and the access of the non-poor workers to financial services, suggesting that improving financial access for the excluded non-poor can have a strong reducing-effect on working poverty.

Suggested Citation

  • Aïssata COULIBALY & Urbain Thierry YOGO, 2016. "Access to Financial Services and Working Poverty in Developing Countries," Working Papers 201620, CERDI.
  • Handle: RePEc:cdi:wpaper:1833
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial access; Working poverty; Trickle-down effect.;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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