Does Financial Structure Matter for Poverty? Evidence from Developing Countries

Although there has been research looking at the relationship between the structure of the financial system and economic growth, much less work has dealt with the importance of bank-based versus market-based financial systems for poverty and income distribution. Empirical evidence has indicated that the structure of the financial system has little relevance for economic growth, suggesting that the same could be true for poverty since growth is an important driver in reducing poverty. Some theories, however, claim that, by reducing information and transaction costs, the development of bank-based financial systems could exert a particularly large impact on the poor. This paper looks at a sample of 47 developing economies from 1984 through 2008. The results suggest that when institutions are weak, bank-based financial systems are better at reducing poverty and, as institutions develop, market-based financial systems can turn out to be beneficial for the poor.

Bibliographic Details

Main Authors:	Kpodar, Kangni, Singh, Raju Jan
Language:	English
Published:	2011-12-01
Subjects:	ACCESS TO CREDIT, ACCESS TO EDUCATION, ACCESS TO FINANCE, ACCESS TO MARKETS, ACCESS TO SERVICES, ACCOUNTING, ADVANCED COUNTRIES, ADVERSE SELECTION, AGRICULTURAL SECTOR, AMOUNT OF COLLATERAL, BAD BANKS, BANK ASSETS, BANK BRANCH, BANK BRANCHES, BANK CREDIT, BANK LOANS, BANK POLICY, BANKING CONCENTRATION, BANKING SECTOR, BANKING SECTOR DEVELOPMENT, BANKING SECTOR EFFICIENCY, BANKING SYSTEM, BANKING SYSTEMS, BASIC NEEDS, BOND, BORROWING, CAPITAL ALLOCATION, CAPITALIZATION, CENTRAL BANKS, CHILD LABOR, CLEAN WATER, COLLATERAL, COMMERCIAL BANK, COMMERCIAL BANK ASSETS, COMMERCIAL BANKS, CONSUMER PRICE INDEX, CONTRACT ENFORCEMENT, CORPORATE FINANCE, COUNTRY COMPARISONS, COUNTRY RISK, CREDIT CONSTRAINTS, CREDIT GROWTH, CREDIT MARKET, CREDIT MARKETS, CREDIT RATIONING, CREDITOR, CREDITOR RIGHTS, CURRENCY, DEBT, DEFAULTS, DEPOSIT, DEPOSIT INSURANCE, DEPOSIT MONEY BANKS, DEPOSITS, DEREGULATION, DEVELOPING COUNTRIES, DEVELOPING ECONOMIES, DEVELOPMENT BANKING, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DISCRIMINATION, DISTRIBUTION OF INCOME, DOMESTIC EQUITIES, DOMESTIC EXCHANGES, DURABLE, DURABLE ASSETS, EARNINGS, ECONOMETRICS, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC OPPORTUNITIES, ECONOMIC PERFORMANCE, ECONOMIC RESEARCH, ECONOMIC THEORY, EDUCATION LEVEL, EMPLOYMENT, ENROLMENT RATE, ENTREPRENEUR, ENTREPRENEURS, EQUITY MARKETS, EXPECTED RETURN, EXPORTS, FINANCIAL DEEPENING, FINANCIAL DEPTH, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL INTERMEDIARIES, FINANCIAL INTERMEDIARY, FINANCIAL INTERMEDIATION, FINANCIAL LIBERALIZATION, FINANCIAL MARKETS, FINANCIAL SECTOR DEVELOPMENT, FINANCIAL SECTOR REFORMS, FINANCIAL SERVICES, FINANCIAL STRUCTURE, FINANCIAL STUDIES, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FIXED COST, FORMAL FINANCIAL INSTITUTIONS, FORMAL FINANCIAL SECTOR, FUTURE EARNINGS, GDP, GDP PER CAPITA, GINI COEFFICIENT, GOVERNMENT EXPENDITURES, GREATER ACCESS, GROWTH MODELS, HEALTH SERVICES, HIGH INTEREST RATES, HOUSEHOLD INCOME, HOUSEHOLDS, HOUSING, HUMAN CAPITAL, HUMAN DEVELOPMENT, INCOME DISTRIBUTION, INCOME INEQUALITIES, INCOME INEQUALITY, INCOME LEVELS, INCOME VARIABILITY, INCOMES, INDIVIDUAL INVESTORS, INEFFICIENCY, INFLATION, INFLATION RATE, INFLATION RATES, INFORMATION ASYMMETRIES, INFORMATION ASYMMETRY, INFORMATION ON BORROWERS, INFORMATION SHARING, INFRASTRUCTURE DEVELOPMENT, INSTITUTIONAL DEVELOPMENT, INSTITUTIONAL ENVIRONMENT, INSTITUTIONAL REFORMS, INSTRUMENT, INTEREST RATE, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL FINANCIAL STATISTICS, JOB CREATION, JOB OPPORTUNITIES, LABOR MARKETS, LACK OF ACCESS, LEGAL RIGHTS, LEGAL SYSTEM, LEGAL SYSTEMS, LENDER, LENDERS, LIQUIDITY, LOAN, LOAN-TO-DEPOSIT RATIO, LORENZ CURVE, M2, M3, MACROECONOMIC ENVIRONMENT, MACROECONOMIC VARIABLES, MACROECONOMICS, MARKET CONSTRAINTS, MARKET EFFICIENCY, MARKET LIQUIDITY, MARKET VALUE, MICRO DATA, MICROFINANCE, MIDDLE-INCOME COUNTRIES, MONETARY FUND, NET INTEREST MARGIN, OVERHEAD COST, OVERHEAD COSTS, PER CAPITA INCOME, POLITICAL ECONOMY, POOL OF BORROWERS, POVERTY ALLEVIATION, PRICE STABILITY, PRIVATE CREDIT, PRIVATE PROPERTY, PRIVATE SECTOR CREDIT, PROBABILITY OF REPAYMENT, PROFITABILITY, PROPERTY RIGHT, PROPERTY RIGHTS, PRUDENTIAL REQUIREMENTS, REMITTANCES, RESOURCE ALLOCATION, RETURN, RISK DIVERSIFICATION, RISK SHARING, RULE OF LAW, RURAL BANK, RURAL BANK BRANCHES, RURAL BANKS, SAVINGS, SHAREHOLDER, SHAREHOLDER PROTECTION, SKILLED WORKERS, SMALL ENTERPRISES, SOCIAL BANKING, STOCK MARKET, STOCK MARKET CAPITALIZATION, STOCK MARKET DEVELOPMENT, STOCK MARKET DEVELOPMENTS, STOCK MARKETS, TRADE LIBERALIZATION, TRANSACTION, TRANSACTION COSTS, TRANSPARENCY, TURNOVER, VILLAGES, WAGE RATES, WAGES, WEALTH, WORLD DEVELOPMENT INDICATORS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111213133824 https://hdl.handle.net/10986/3685
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