The path to shared prosperity: Leveraging financial services outreach to create decent jobs in developing countries

Aïssata Coulibaly and Urbain Thierry Yogo

Economic Modelling, 2020, vol. 87, issue C, 131-147

Abstract: Understanding the channels through which financial inclusion affects poverty reduction remains a key policy issue in development debates. Considering that labour is the main asset of the poor, this paper investigates the effect of financial outreach on the number of workers living below the poverty line. It also analyses whether this effect may occur through increasing investment, remittances, private credit and the number of rich workers who can provide employment opportunities to the poorest. The study finds that improving financial outreach through additional bank branches reduces the number of poor workers, especially in developing countries hit by macroeconomic instability. In addition, this effect occurs mainly through credit expansion, while other channels substitute financial outreach in countries with a low level of financial development.

Keywords: Decent job; Working poverty; Financial outreach; Bank penetration; Remittances; Private credit; Trickle-down hypothesis; Developing countries (search for similar items in EconPapers)
JEL-codes: D31 G21 I30 J8 O15 O16 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:87:y:2020:i:c:p:131-147

DOI: 10.1016/j.econmod.2019.07.013

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