Keywords
financial development; poverty alleviation; income distribution; Africa
Abstract
Recent studies on the relationship between financial development and poverty have been inconclusive. Some claim that, by allowing more entrepreneurs to obtain financing, financial development improves the allocation of capital, which has a particularly large impact on the poor. Others argue that it is primarily the rich and politically connected who benefit from improvements in the financial system. This paper looks at a sample of 37 countries in sub-Saharan Africa from 1992 through 2006. Its results suggest that financial deepening could widen income inequality and increase poverty, if not accompanied by stronger property rights. Similarly, interest rate and lending liberalization alone could be detrimental to the poor without institutional reforms, in particular stronger property rights and wider access to credit information.
Acknowledgments
There has also been a considerable literature on the impact of growth and poverty and on how best to reduce income inequality. This paper does not try to argue that financial deepening is the most effective and direct way to reduce poverty, but only discusses a possible association between these two variables.
Recommended Citation
Singh, R., & Huang, Y. (2024). Financial Deepening, Property Rights, and Poverty: Evidence from Sub-Saharan Africa. Journal of Banking and Financial Economics, 2015(3), 130-151. https://doi.org/10.7172/2353-6845.jbfe.2015.1.6
First Page
130
Last Page
151
Page Count
22
Received Date
19 January 2015
Revised Date
14 April 2015
Accept Date
17 April 2015
Online Available Date
19 May 2015
DOI
10.7172/2353-6845.jbfe.2015.1.6
JEL Code
O11; O16; G00
Publisher
University of Warsaw