Financial Development, Financial Instability and Poverty

Sylviane Guillaumont Jeanneney () and KPODAR Kangni ()
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KPODAR Kangni: Fonds Monétaire International

No 200607, Working Papers from CERDI

Abstract: This article investigates how financial development is beneficial to the reduction of poverty, on the one hand by promoting growth and in the other hand directly by the McKinnon conduit effect. At the same time, however, financial instability which accompanies financial development is detrimental to the poor and dampens the positive effect of financial development on the reduction of poverty. These hypotheses are tested successfully on a sample of developing countries over the period 1966-2000, resulting in straightforward policy implications.

Date: 2006
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Persistent link: http://EconPapers.repec.org/RePEc:cdi:wpaper:788

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