Financial Development, Institutional Quality and Poverty Reduction: Worldwide Evidence

Kaidi, Nasreddine; Mensi, Sami; Amor, Mehdi Ben

doi:10.1007/s11205-018-1836-0

Cited by 55 publications

(39 citation statements)

References 45 publications

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“…Within the framework of empirical findings in Turkey, it is recommended that the following direct policies be followed (Law and Tan 2009;Suter 2010;Shahbaz and Islam 2011;Law et al 2014;Ahmed and Masih 2017;Kaidi et al 2018): (a) Policymakers should take measures to reduce constraints and disruptions in the financial markets when designing policies to combat poverty and economic growth. (b) A financial environment should be created to enable the poor to reach a better life opportunity.…”

Section: Resultsmentioning

confidence: 99%

The effect of financial development on income inequality in Turkey: An estimate of the Greenwood-Jovanovic hypothesis

Koçak

Uzay

2019

Review of Economic Perspectives

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This paper is the first to examine the linear and nonlinear effect of financial development on income inequality in Turkey over the period of 1980-2013. Financial development is represented by disaggregated and aggregated indicators. In this way, the effects of various financial indicators on income inequality are explained. Maki (2012) structural breaks co-integration test, and Stock and Watson (1993) dynamic ordinary least squares (DOLS) methods are followed for empirical analysis. Finally, the fully modified least squares (FM-OLS) regression analysis method developed by Philips and Hansen (1990) is used for robustness check. The estimation results of the linear relationship indicate that financial development is a mitigating effect on income inequality. These results support the inequality-narrowing hypothesis. The non-linear relationship results show that financial development first increases income inequality but after financial development reaches a certain level, this effect is reversed and financial development reduces income inequality. These results support the Greenwood-Jovanovic hypothesis. All the results strongly suggest that financial development is a mitigating or improving effect on income inequality over the long-run.

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Section: Resultsmentioning

confidence: 99%

The effect of financial development on income inequality in Turkey: An estimate of the Greenwood-Jovanovic hypothesis

Koçak

Uzay

2019

Review of Economic Perspectives

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“…Household consumption expenditure captures income poverty, and infant mortality rate captures health poverty. In the literature, household consumption expenditure has been used to capture poverty (see, for example, Ravallion 2001;Odhiambo 2009a, b;Kaidi et al 2018). A positive relationship between household consumption expenditure and remittance means remittance reduce poverty, while a negative relationship implies remittance worsen poverty.…”

Section: Variablesmentioning

confidence: 99%

THE impact of remittance inflows on poverty in Botswana: an ARDL approach

Musakwa

Odhiambo

2019

Economic Structures

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The growing need to find a solution to poverty alleviation has resulted in heightened interest from researchers to find the most important economic variable that could serve as a panacea to poverty alleviation. Consequently, the surge in remittance inflows globally, in general, and in low and middle-income countries, in particular, has ignited studies focused on the establishment of the nature of the relationship between remittance and poverty. According to Migration Policy Institute (2019), the global monetary transfers from migrants reached $689 billion in 2018 with remittance inflows to low and middle-income countries, taking 77% of the global transfer. The monetary transfers to low and middle-income countries are expected to grow by $21 billion in 2019 and projected to reach $550 billion (Migration Policy Institute 2019). Remittance has grown to be an important source of foreign income besides foreign direct investment and official development assistance (ODA) (Ratha et al. 2018).

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“…The significance of institutions is confirmed by Zahonogo (2016) who estimated a dynamic growth model for 42 SSA countries using data for the period 1980-2012 using the Pooled Mean Group (PMG) panel data estimation technique. In the same vein, other studies find that other factors important in the trade poverty nexus are macroeconomic stability (Newfarmer & Sztajerowska, 2012) complementary fiscal and monetary policies (Shuaibu, 2017) and financial development (Kaidi, Sami, & Mehdi, 2019).…”

Section: Empirical Literaturementioning

confidence: 83%

The Impact of Trade on Poverty in Sub-Saharan Africa: Do Sources Matter?

Sunge¹,

Kumbula²,

Makamba³

2021

International Journal of Business, Economics and Management

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Global trade development has provided noteworthy global poverty gains since the 1990s. Accordingly, Africa has gradually engaged itself in trade and trade policy reforms through multilateral and regional trade agreements among other initiatives. Nonetheless, poverty levels in the Sub-Saharan Africa (SSA) region remain relatively high. Recognizing that existing evidence on trade-poverty nexus is based on aggregate trade, we provide a new perspective on SSA by disaggregating trade by sources for the period 2003-2017. We employed the Generalised Method of Moments (GMM) estimation of a panel data model derived from the Modified Basic Household Model and Neo-Conservative Poverty Theory for analysis. The results document poverty gains from trade liberalization, with the extent varying according to sources. Specifically, trade from MENA and within SSA was found to offer more gains. Furthermore, findings suggest that poverty gains from trade are strengthened with better institutional quality. It follows that to accelerate poverty gains from trade liberalization, SSA should promote intra-Africa trade as well as trade with MENA countries. To accelerate the gains, Africa has to invest in better institutions, in particular, to improve governance and corruption eradication. Contribution/Originality:This study contributes to existing literature on trade-poverty nexus in two ways.Firstly, instead of basing conclusions on aggregate trade, we focus on trade by sources. We disaggregate SSA's trade by regional sources. Secondly, we introduce control of corruption interaction term to control for institutional quality in the analysis. INTRODUCTIONDespite the worldwide poverty rate having immensely reduced since 2000, poverty alleviation remains topical.The United Nations, through the Sustainable Development Goals (SDGs), places poverty eradication at the top of the global development agenda. SDG number one envisages ending extreme poverty in all forms by 2030. The African Union Commission (AUC) Agenda 2063's aspiration for "a high standard of living, quality of life and wellbeing for all citizens" (New Partnership for Africa's Development (NEPAD, 2019) targets an end to poverty as a priority. The World Bank and World Trade Organisation (WB and WTO, 2019) recognize trade liberalization as an avenue to eradicate poverty.

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Financial Development, Institutional Quality and Poverty Reduction: Worldwide Evidence

Cited by 55 publications

References 45 publications

The effect of financial development on income inequality in Turkey: An estimate of the Greenwood-Jovanovic hypothesis

The effect of financial development on income inequality in Turkey: An estimate of the Greenwood-Jovanovic hypothesis

THE impact of remittance inflows on poverty in Botswana: an ARDL approach

The Impact of Trade on Poverty in Sub-Saharan Africa: Do Sources Matter?

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