Finance, inequality and the poor

Thorsten Beck, Asli Demirguc-Kunt and Ross Levine ()

Journal of Economic Growth, 2007, vol. 12, issue 1, 27-49

Abstract: Financial development disproportionately boosts incomes of the poorest quintile and reduces income inequality. About 40% of the long-run impact of financial development on the income growth of the poorest quintile is the result of reductions in income inequality, while 60% is due to the impact of financial development on aggregate economic growth. Furthermore, financial development is associated with a drop in the fraction of the population living on less than $ 1 a day, a result which holds when conditioning on average growth. These findings emphasize the importance of the financial system for the poor. Copyright Springer Science+Business Media, LLC 2007

Keywords: Financial systems; Income distribution; Economic development; Poverty alleviation; O11; O16; G00 (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1007/s10887-007-9010-6

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