Financial Development, Growth, and Poverty : How Close are the Links?

By Patrick Honohan. 2004

460 citations recorded by the source corpus.

The causal link between finance and growth is one of the most striking empirical macroeconomic relationships uncovered in the past decade. As this branch of the literature matures, the focus shifts from growth to other aspects of economic prosperity, and from financial depth to multidimensional measures of financial development. The author reviews the evolution of the literature and contributes by: Showing that financial depth is negatively associated with headcount poverty, even after taking account of mean income and inequality. Illustrating the pitfalls in equating financial development with financial depth. Proposing alternative measures of financial development that, though summary, capture its multidimensional nature.

Subfields: Economics and Econometrics, Finance, Information Systems

View Paper: https://www.semanticscholar.org/paper/ea52177d5e53b2d4cc4420f9d0abb0b22ac581ca

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Citations in the corpus

Financial Sector Development, Savings Mobilization and Poverty Reduction in Ghana (2005, background): “Similarly, Honohan (2004) finds that financial development (measured by private credit to GDP ratio) is negatively associated with headcount poverty, with a coefficient suggesting that a 10 percentage point increase in the ratio of private credit to GDP should (even at the same mean income level)…”
Financial Development, Inequality and Poverty: Some International Evidence (2016, background): “Cross-country evidence from Beck and others (2004), Beck and others (2007), Honohan (2004), Li and others (1998), and Rajan and Zingales (2003) suggests that expanding private credit can stimulate income growth for the poorest quintiles and reduce income inequality, strongly refuting the position…”
Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review (2009, background): “Several authors have surveyed this large literature (see, for example, Honohan 2004a, 2004b; DFID 2004; Levine 2004; and Andrianova and Demetriades 2008).”
ACHIEVING THE SUSTAINABLE DEVELOPMENT GOALS (2016, background): “Lower poverty ratios also are linked to financial depth, which includes a robust stock market, and active lending to businesses by banks (Honohan 2004).”
Finance, inequality and the poor (2007, background): “Private Credit is positively and significantly correlated with the Growth of poorest income share, but negatively correlated with Growth of Gini and Growth of Headcount (Honohan, 2004), indicating that countries with more developed financial systems experienced a faster reduction in the number of pe”
Finance and inequality: The case of India (2010, methodology): “This ratio is relatively lower than many other developing countries such as Bangladesh, Indonesia and Thailand where microfinance claims 13.1%, 6.7% and 6.5% of the population as clients, respectively (see Honohan, 2004b).”
The Basic Analytics of Access to Financial Services (2006, background): “Bossone, B., P. Honohan, and M. Long.”
Is Financial Globalization Beneficial (2007, background): “…fifth of the population actually grows faster than average GDP per capita (Hongyi, Squire and Zou, 2001, Beck, Demirguc-Kunt and Levine, 2004, Honohan, 2004), indicating clearly that financial development is associated with reductions in poverty and even with reductions in the use of child…”
Financial development and poverty reduction in developing countries: New evidence from banks and microfinance institutions (2016, background): “These studies include Honohan (2004), Jalilian and Kirkpatrick (2005), Beck et al. (2007), Perez-Moreno (2011), Jeanneney and Kpodar (2011), and Sehrawat and Giri (2015) although they differ both in terms of what proxies for financial development they use as well as in their outcome variable…”
Finance, Financial Sector Policies, and Long-Run Growth (2008, background): “In contrast, in Japan, Korea, Singapore, and Thailand, PROPORTION_FASTER is greater than 50 percent.”
Reaching out : access to and use of banking services across countries (2005, background): “…known about the breadth of financial systems across countries, the extent to which enterprises and households use financial services, and their relationship to desirable outcomes.2 This lack of knowledge stems mostly from a dearth of adequate data (see discussion of data issues in Honohan 2004b).”