Financial Development and Poverty Reduction in Emerging Market Economies

Abstract

Poverty reduction is one of the key challenges in the globalized world. This study investigates the relationship between financial development and poverty reduction in emerging market economies during the period 1993-2012. The Carrión-i-Silvestre, del Barrio-Castro, and López-Bazo (2005) panel unit root test and the Basher and Westerlund (2009) cointegration test was applied considering the cross-sectional dependence and multiple structural breaks in the study period. The findings indicated that financial development, including banking sector development and stock market development, had a significant positive impact on poverty reduction in emerging market economies.

Key words: Financial development, Poverty reduction, Multiple structural breaks, Panel cointegration.
JEL: G20, I32, O16.

Smanjenje siromaštva je jedan od ključnih izazova u globalizovanom svetu. Ova studija istražuje odnos između finansijskog razvoja i smanjenja siromaštva u tržišnim ekonomijama u razvoju u periodu između 1993-2012. Carrión-i-Silvestre, del Barrio-Castro, and López-Bazo (2005) panel testovi jediničnog korena i Basher and Westerlund (2009) kointegracioni test je je primenjen s obzirom na zavisnost između poprečnih preseka i s obzirom na višestruke strukturne lomove u periodu istraživanja. Nalazi su pokazali da je finansijski razvoj, uključujući razvoj bankarskog sektora i razvoj berzanskog tržišta, imao značajan pozitivan uticaj na smanjenje siromaštva u tržišnim privredama u razvoju.

Ključne reči: Finansijski razvoj, Smanjenje siromaštva, Višestruki strukturni lomovi, Panel kointegracija.