The role of financial development in poverty reduction
Open accessAbstract
This paper investigates whether financial development is conducive in poverty reduction. Separating financial development into four categories and using newly available data this paper finds that both financial deepening and greater physical access is beneficial in reducing the proportion of people below the poverty line. Using alternative measures of financial instability, the results also challenge existing findings that it may increase the incidence of poverty. In addition, the results remain robust even when controlling for mobile money, providing a further valuable contribution to the literature.
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Financial development has a significant effect on poverty alleviation in 71 developing countries.
“Meanwhile, financial development also has a significant effect on poverty alleviation in 71 developing countries (Donou-Adonsou and Sylwester, 2016;Rewilak, 2017).”
From Islamic banks' contribution to Indonesia districts' economic growth and poverty alleviation (2024) · cites this paper as Rewilak, 2017
The Conclusion reports poverty-reducing effects for financial deepening and physical financial access. But the Empirical strategy states that the number of countries varies from 72 to 124 across specifications, not 71; the claimed sample size is unsupported. (LLM, conf=0.90)
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Research works printed but not linked: 14
- Acemoglu, 2001, The colonial origins of comparative development: an empirical investigation, Am. Econ. Rev., 91, 1369, 10.1257/aer.91.5.1369 · DOI · Paper page
- Akhter, 2009, Finance and poverty: evidence from fixed effect vector decomposition, Emerg. Mark. Rev., 10, 191, 10.1016/j.ememar.2009.02.005 · DOI
- Arcand, 2015, Too much finance?, J. Econ. Growth, 20, 105, 10.1007/s10887-015-9115-2 · DOI · Paper page
- Bhattacharyya, 2014, Do natural resource revenues hinder financial development? The role of political institutions, World Dev., 57, 101, 10.1016/j.worlddev.2013.12.003 · DOI
- Burgess, 2005, Do rural banks matter? Evidence from the Indian social banking experiment, Am. Econ. Rev., 95, 780, 10.1257/0002828054201242 · DOI · Paper page
- Cihak, 2013, Financial development in 205 economies, 1960 to 2010, J. Financ. Perspect., 1, 17
- Donou-Adonsou, 2016, Financial development and poverty reduction in developing countries: new evidence from banks and microfinance institutions, Rev. Dev. Financ., 6, 82, 10.1016/j.rdf.2016.06.002 · DOI · Paper page
- Guillaumont Jeanneney, 2011, Financial development and poverty reduction: can there be a benefit without a cost?, J. Dev. Stud., 47, 143, 10.1080/00220388.2010.506918 · DOI
- Mookerjee, 2010, Availability of financial services and income inequality: the evidence from many countries, Emerg. Mark. Rev., 11, 404, 10.1016/j.ememar.2010.07.001 · DOI
- Perez-Moreno, 2011, Financial development and poverty in developing countries: a causal analysis, Empir. Econ., 41, 57, 10.1007/s00181-010-0392-5 · DOI
- Rajan, 2003, The great reversals: the politics of financial development in the twentieth century, J. Financ. Econ., 69, 5, 10.1016/S0304-405X(03)00125-9 · DOI · Paper page
- Rioja, 2004, Does one size fit all? A reexamination of the finance–growth relationship, J. Dev. Econ., 74, 429, 10.1016/j.jdeveco.2003.06.006 · DOI
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Acheampong, A. O., Appiah-Otoo, I., Dzator, J., & Agyemang, K. K. (2021) · Journal of Policy Modeling · doi:10.1016/j.jpolmod.2021.09.005 · Cited by 80 · see citing works
Islamic banks' contribution to Indonesia districts' economic growth and poverty alleviation
Junaidi, J. (2024) · Journal of Economics, Finance and Administrative Science · doi:10.1108/jefas-06-2021-0097 · Cited by 40 · see citing works
- Authors
- Rewilak, J.
- Affiliations
- Aston University (GB)
- Corresponding author
- Rewilak, Johan
- ORCID
- Rewilak, Johan
- Venue
- Review of Development Finance
- Publisher
- Elsevier BV
- Published
- 2017-12
- Volume
- 7
- Issue
- 2
- Pages
- 169-176
- ISSN
- 1879-9337 (ISSN-L)
- OpenAlex
- W2768861243
- Cited by
- 159
- References
- 0
- Citations by year
- 2026: 5 · 2025: 14 · 2024: 18 · 2023: 28 · 2022: 25 · 2021: 34 · 2020: 15 · 2019: 16 · 2018: 2 · 2017: 2
- FWCI
- 16.10
- Type
- journal article
- Language
- en
- Open access
- hybrid
- doi.org
- Licence
- Locations
- Review of Development Finance (publishedVersion, cc-by-nc-nd)
- Aston Publications Explorer (Aston University) (submittedVersion)
- Econstor (Econstor) (submittedVersion, cc-by-nc-nd)
- Funders
- Economic and Social Research Council (ES/J009067/1)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Microfinance and Financial Inclusion
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Sociology and Political Science › Income, Poverty, and Inequality
- Keywords
- financial development, poverty reduction, financial deepening, financial inclusion, access to finance, financial instability, mobile money, poverty rate
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