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DOES FINANCIAL DEVELOPMENT REDUCE POVERTY? EVIDENCE FROM LOW-INCOME AND LOW-MIDDLE-INCOME COUNTRIES.

Nwachukwu, Precious Chidinma LU (2022) NEKN01 20221
Department of Economics
Abstract
In the last decades, low-income and low-middle-income countries still presents high levels of poverty despite several efforts by development organizations and policy makers to reduce poverty. Specifically, this paper tests if financial depth and financial access reduces the poverty headcount ratio in 45 low-income and low-middle-income countries and compares both results to know which measure is more efficient in reducing poverty. In performing this analysis, a panel dataset was built, and the fixed effects estimator was employed. The Wald test and Wooldridge test was also used to check for the presence of heteroskedasticity and serial correlation respectively. Comparing both results can provide a better understanding on which area of... (More)
In the last decades, low-income and low-middle-income countries still presents high levels of poverty despite several efforts by development organizations and policy makers to reduce poverty. Specifically, this paper tests if financial depth and financial access reduces the poverty headcount ratio in 45 low-income and low-middle-income countries and compares both results to know which measure is more efficient in reducing poverty. In performing this analysis, a panel dataset was built, and the fixed effects estimator was employed. The Wald test and Wooldridge test was also used to check for the presence of heteroskedasticity and serial correlation respectively. Comparing both results can provide a better understanding on which area of financial development reduces poverty more. The results showed that there is a highly significant relationship between financial depth, financial access, and poverty reduction. The effect sizes of the different indicators implies that financial access is relatively more effective in reducing poverty with a 0.54 unit compared to financial depth of 0.46 unit. Therefore, if the major goal of governments and policymakers is to reduce poverty, then the greatest impact is to increase access to financial services, complemented with financial depth development. (Less)
Please use this url to cite or link to this publication:
author
Nwachukwu, Precious Chidinma LU
supervisor
organization
course
NEKN01 20221
year
type
H1 - Master's Degree (One Year)
subject
keywords
Financial Development, Poverty, Financial Depth, Financial Access.
language
English
id
9099773
date added to LUP
2022-10-10 09:23:06
date last changed
2022-10-10 09:23:06
@misc{9099773,
  abstract     = {{In the last decades, low-income and low-middle-income countries still presents high levels of poverty despite several efforts by development organizations and policy makers to reduce poverty. Specifically, this paper tests if financial depth and financial access reduces the poverty headcount ratio in 45 low-income and low-middle-income countries and compares both results to know which measure is more efficient in reducing poverty. In performing this analysis, a panel dataset was built, and the fixed effects estimator was employed. The Wald test and Wooldridge test was also used to check for the presence of heteroskedasticity and serial correlation respectively. Comparing both results can provide a better understanding on which area of financial development reduces poverty more. The results showed that there is a highly significant relationship between financial depth, financial access, and poverty reduction. The effect sizes of the different indicators implies that financial access is relatively more effective in reducing poverty with a 0.54 unit compared to financial depth of 0.46 unit. Therefore, if the major goal of governments and policymakers is to reduce poverty, then the greatest impact is to increase access to financial services, complemented with financial depth development.}},
  author       = {{Nwachukwu, Precious Chidinma}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{DOES FINANCIAL DEVELOPMENT REDUCE POVERTY? EVIDENCE FROM LOW-INCOME AND LOW-MIDDLE-INCOME COUNTRIES.}},
  year         = {{2022}},
}