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Finance is Good for the Poor but it Depends Where You Live

Listed author(s):
  • Johan Rewilak

    ()

This article examines whether or not the incomes of the poor systematically grow with average incomes, and whether financial development enhances the incomes of the poorest quintile. Following the methodology of Dollar & Kraay (2002), I find once extending Dollar & Kraay's data their findings are robust and economic growth is important to poverty reduction universally. However in comparison to other authors’ work I find financial development aids the incomes of the poor in certain regions, whilst it may be detrimental in others adding a further contribution to the literature on financial development and poverty.

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File URL: http://www.le.ac.uk/economics/research/repec/lec/leecon/dp11-30.pdf
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Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 11/30.

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Date of creation: May 2011
Date of revision: Sep 2011
Handle: RePEc:lec:leecon:11/30
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Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK

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  1. Robin Burgess & Rohini Pande, 2005. "Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment," American Economic Review, American Economic Association, vol. 95(3), pages 780-795, June.
  2. Dollar, David & Kraay, Aart, 2002. "Growth Is Good for the Poor," Journal of Economic Growth, Springer, vol. 7(3), pages 195-225, September.
  3. Rousseau, Peter L. & Wachtel, Paul, 2005. "Economic Growth and Financial Depth: Is the Relationship Extinct Already?," WIDER Working Paper Series DP2005/10, World Institute for Development Economic Research (UNU-WIDER).
  4. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series,in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.), Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084 Central Bank of Chile.
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  6. Levine, Ross & Zervos, Sara, 1998. "Stock Markets, Banks, and Economic Growth," American Economic Review, American Economic Association, vol. 88(3), pages 537-558, June.
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  10. Akhter, Selim & Daly, Kevin J., 2009. "Finance and poverty: Evidence from fixed effect vector decomposition," Emerging Markets Review, Elsevier, vol. 10(3), pages 191-206, September.
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  15. Martin Ravallion & Shaohua Chen & Prem Sangraula, 2009. "Dollar a Day Revisited," World Bank Economic Review, World Bank Group, vol. 23(2), pages 163-184, June.
  16. Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
  17. Arestis, Philip & Demetriades, Panicos O, 1997. "Financial Development and Economic Growth: Assessing the Evidence," Economic Journal, Royal Economic Society, vol. 107(442), pages 783-799, May.
  18. Atif Mian, 2006. "Distance Constraints: The Limits of Foreign Lending in Poor Economies," Journal of Finance, American Finance Association, vol. 61(3), pages 1465-1505, 06.
  19. Luintel, Kul B. & Khan, Mosahid, 1999. "A quantitative reassessment of the finance-growth nexus: evidence from a multivariate VAR," Journal of Development Economics, Elsevier, vol. 60(2), pages 381-405, December.
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