Financial channels, property rights, and poverty: a Sub-Saharan African perspective

Raju Singh and Yifei Huang

No 7559, Policy Research Working Paper Series from The World Bank

Abstract: Studies on the link between financial development and poverty have been inconclusive. Some claim that deeper financial sectors should improve the allocation of capital by allowing entrepreneurs greater access to finance, which should particularly favor the poor. Others argue that improvements in the financial system primarily benefit the rich and politically connected. The literature has also been ambiguous about the channels through which finance may be associated with lower poverty (deposits versus credit). Looking at a sample of 37 countries in Sub-Saharan Africa from 1992 through 2006, the paper suggests that financial deepening is associated with lower poverty through different channels depending on the strength of property rights. In the absence of well-defined and enforced property rights, wider access to saving and risk-sharing instruments is accompanied by a reduction in poverty. Only once property rights grow stronger is credit associated with lower poverty.

Keywords: Small Area Estimation Poverty Mapping; Poverty Impact Evaluation; Access to Finance; Poverty Assessment; Poverty Lines; Poverty Diagnostics; Poverty Monitoring&Analysis (search for similar items in EconPapers)
Date: 2016-02-08
New Economics Papers: this item is included in nep-afr and nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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