Are Financial Development and Financial Stability Complements or Substitutes in Poverty Reduction?

Sunny Singh and Chandan Jha

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies the association between financial development, financial stability, and poverty for a sample of 136 developed and developing countries over the period 1995-2018. Most of the existing studies in this literature have focused on financial development. Few recent studies have looked at the effects of financial stability. However, none of the existing studies has looked at the interaction effect of the two on poverty. Our contribution to this literature is manifold. First and foremost, we investigate whether financial development and financial stability are substitutes or complement in reducing poverty and find evidence in favour of the former: financial development has greater effects on poverty alleviation in a more fragile financial system and vice-versa. Second, using two different measures of financial stability, we show that financial stability is associated with lower levels of poverty. And, finally, while previous studies have presumed that the effect of financial development on poverty is homogeneous at various levels of poverty, we show that financial development and financial stability both have heterogeneous effects on poverty depending on the level of poverty considered.

Keywords: Financial Development; Financial Stability; Poverty Gap Ratio; Panel Quantile Regression (search for similar items in EconPapers)
JEL-codes: G20 I30 O1 O11 (search for similar items in EconPapers)
Date: 2021-10-20
New Economics Papers: this item is included in nep-cwa and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/111615/1/MPRA_paper_111615.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:111615

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().