Finance is good for the poor but it depends where you live

Abstract

The author examines whether or not the incomes of the poor systematically grow with average incomes, and whether financial development enhances the incomes of the poorest quintile. Following the methodology of Dollar and Kraay (2002), He find, once extending Dollar and Kraay’s data, their findings are robust to the Lucas critique and economic growth is important for poverty reduction universally. However, in comparison to other authors’ work he show financial development aids the incomes of the poor in certain regions, whilst it may be detrimental in others. This proposes evidence against a “one size fits all” model adding a further contribution to the literature on financial development and poverty. This is an output from the ‘Politics, Finance and Growth’ Project