Financial development, growth, and poverty: how close are the links?

Patrick Honohan

No 3203, Policy Research Working Paper Series from The World Bank

Abstract: The causal link between finance and growth is one of the most striking empirical macroeconomic relationships uncovered in the past decade. As this branch of the literature matures, the focus shifts from growth to other aspects of economic prosperity, and from financial depth to multidimensional measures of financial development. The author reviews the evolution of the literature and contributes by: Showing that financial depth is negatively associated with headcount poverty, even after taking account of mean income and inequality. Illustrating the pitfalls in equating financial development with financial depth. Proposing alternative measures of financial development that, though summary, capture its multidimensional nature.

Keywords: Payment Systems&Infrastructure; Fiscal&Monetary Policy; Economic Theory&Research; Banks&Banking Reform; Environmental Economics&Policies; Achieving Shared Growth; Governance Indicators; Economic Theory&Research; Banks&Banking Reform; Environmental Economics&Policies (search for similar items in EconPapers)
Date: 2004-02-01
New Economics Papers: this item is included in nep-dev, nep-fin and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (192)

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