Financial Development and Poverty Reduction: A Study of Middle-Income Countries - Economic Research Forum (ERF)

Financial Development and Poverty Reduction: A Study of Middle-Income Countries

Nasreddine Kaidi and Sami Mensi

September, 2018


24 pages

G1. General Financial Markets
G2. Financial Institutions and Services
O1. Economic Development

This paper examines the impact of financial development on poverty in middle-income countries. To that end, we made recourse to several estimation techniques over a study period stretching from 1980 to 2014. The results indicate that development of the banking system does not necessarily improve the poor’s conditions. However, development of the stock market does. Through a sensitivity analysis, we concluded that our banking index is sensitive to the use of the poverty index, while our stock market index is sensitive to the choice of the middle-income vs. high income studied countries.


تبحث هذه الورقة أثر التنمية المالية على الفقر في البلدان المتوسطة الدخل. ولهذه الغاية، لجأنا إلى العديد من تقنيات التقدير خلال فترة دراسة امتدت من 1980 إلى 2014. وتشير النتائج إلى أن تطوير النظام المصرفي لا يؤدي بالضرورة إلى تحسين ظروف الفقراء. وبينما يؤدى تطوير سوق الأوراق المالية إلى ذلك. من خلال تحليل الحساسية، خلصنا إلى أن مؤشرنا المصرفي حساس لاستخدام مؤشر الفقر، في حين أن مؤشر سوق لأوراق المالية لدينا حساس لاختيار البلدان ذات الدخل المتوسط مقابل البلدان ذات الدخل المرتفع


Nasreddine Kaidi

University of Manouba

Research Associates

Sami Mensi

Al-Baha University



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