Multivariate-based Granger causality between financial deepening and poverty: the case of Pakistan

Rehman, Ijaz Ur; Shahbaz, Muhammad

doi:10.1007/s11135-013-9952-z

Cited by 21 publications

(9 citation statements)

References 29 publications

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“…Ravallion and Datt (2002), Fan et al (2000) and Uddin et al (2014) found that a long-run relationship between financial development, economic growth and poverty reduction exists in Bangladesh, and financial development helps to reduce poverty, but its effect is not linear. Shahbaz and Rehman (2013) find that financial development causes poverty reduction in Pakistan. Shahbaz and Kirkpatrick (2001) tested the relationship between financial development and poverty through the growth channel.…”

Section: Literature Reviewmentioning

confidence: 99%

The nexus between financial development and poverty reduction in Egypt

Kheir¹

2018

REPS

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Purpose-The purpose of this study is to empirically examine the impact of financial development on poverty reduction in Egypt. The paper also investigates whether financial development affects poverty via gross domestic product (GDP) growth. Design/methodology/approach-This study uses the autoregressive distributed lag approach to estimate two specifications. The first is dependent on poverty by the ratio domestic credit to the private sector (percentage of GDP) and the second is dependent on the poverty by the ratio liquid liabilities to GDP or M3/GDP. The data are annual and cover the period from 1980 to 2015. Findings-In long run, the study finds that relationship between economic growth and poverty is bidirectional. Financial development and poverty (household final consumption expenditure per capita) are complementary as bidirectional (in Granger sense). In short run, the study finds the bidirectional causality between financial development (real domestic credit to private sector per capita) and poverty reduction. Practical implications-The findings suggest that governments should remove policies that impede the ability of banks to offer loan products or undermine the commercial incentive structure for banks or borrowers. It is crucial to enhance the role of specialized state-owned banks in financial intermediation. Social implications-Several attempts have been made to investigate the relationship between financial development and other macroeconomic variables, but few studies have examined the impact of financial development on poverty reduction. Furthermore, the majority of the previous studies are based on Asia and Latin Americaaffording Egypt very little or no coverage at all.

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Section: Literature Reviewmentioning

confidence: 99%

The nexus between financial development and poverty reduction in Egypt

Kheir¹

2018

REPS

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“…Household consumption expenditure is measured as a percentage of gross domestic product (GDP). This poverty proxy was used in some studies as a poverty measure (see, Rehman and Shahbaz 2014;Magombeyi and Odhiambo 2017;Kaidi et al 2018;Musakwa and Odhiambo 2020). Household consumption expenditure was selected in the study to capture the income dimen-sion of poverty.…”

Section: Definition Of Variablesmentioning

confidence: 99%

The causal relationship between remittance and poverty in South Africa: A multivariate approach

Musakwa¹,

Odhiambo²

2021

Int Social Sci J

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The main objective of this study is to investigate the causality between international remittance inflows and poverty in South Africa using time series data from 1980 to 2017. The study was motivated by the increasing role of remittances in poverty reduction and human development on the one hand, and the burgeoning inflow of remittances on the other hand. Since 1998, South Africa remittance inflows have shown a more or less upward trend. As an example, in 1998, the country recorded an increase in remittance inflows of 18.5 per cent and later maintained a steady increase in remittance inflows with an average increase of 25.3 per cent during the period 1999 ‐2017. Using a multivariate Granger‐causality model, our results show that there is a distinct unidirectional causal flow from poverty to remittances in the short term when the infant mortality rate is used as a proxy for poverty. However, when household consumption expenditure is used as a proxy, no causality is found to prevail in both the short and the long term. Policy implications are discussed.

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“…Besides that, using the ARDL bounds testing approach, Chani et al (2011) reports that economic growth has a negative and significant impact on poverty in both the long and short run in Pakistan. Cheema and Sial (2012), Rehman and Shahbaz (2014) and Kalim and Hassan (2014) supply evidence that economic growth can significantly reduce poverty levels through financial development. Hence, the findings exemplify the negative relationship between economic growth and poverty, and the rural poor gain more benefits than urban poor individuals: H1.…”

Section: Literature Reviewmentioning

confidence: 99%

Remittance and poverty in developing countries

Masron¹,

Subramaniam

2018

IJDI

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Purpose Remittances to developing countries, especially less developed countries, have been growing tremendously as compared to the past few decades. Nevertheless, whether they can be a critical source of poverty alleviation in developing countries is yet to be conclusively studied. Therefore, this study investigates the implications of remittances on poverty in 44 developing countries from 2006 to 2014. Design/methodology/approach A dynamic panel estimator is applied to examine remittances – poverty nexus. Findings The results provide strong evidence that the level of poverty tends to be lower in countries with a higher flow of remittances. This may be because of the increase in the household incomes of the poor by virtue of the remittance, and/or the money remitted might be channeled to more productive activities, indicating the powerful role of remittances to maintain a sustainable reduction in poverty. Originality/value Although there is no direct policy applicable to remittances, several areas might be good to be assisted and improved by the government.

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Multivariate-based Granger causality between financial deepening and poverty: the case of Pakistan

Cited by 21 publications

References 29 publications

The nexus between financial development and poverty reduction in Egypt

The nexus between financial development and poverty reduction in Egypt

The causal relationship between remittance and poverty in South Africa: A multivariate approach

Remittance and poverty in developing countries

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