Abstract: A recent cross-country study published by the World Bank answers the important question about the linkage between financial flows and poverty reduction. It finds robust evidence that countries with better-developed financial systems experience faster reductions in income inequality and faster rates of poverty alleviation. The authors conclude that the development of an efficient financial system should thus be at the center of a pro-poor development strategy. This article summarizes these findings and highlights the main policy implications that can be derived from them. Data on income growth and credit to the financial sector were collected from the 1960-99 period for a sample of 52 developed and developing countries.
Publication Year: 2005
Publication Date: 2005-06-01
Language: en
Type: article
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