Financial Channels, Property Rights, and Poverty : A Sub-Saharan African Perspective
Studies on the link between financial development and poverty have been inconclusive. Some claim that deeper financial sectors should improve the allocation of capital by allowing entrepreneurs greater access to finance, which should particularly f...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/02/25884473/financial-channels-property-rights-poverty-sub-saharan-african-perspective http://hdl.handle.net/10986/23887 |
| Summary: | Studies on the link between financial
development and poverty have been inconclusive. Some claim
that deeper financial sectors should improve the allocation
of capital by allowing entrepreneurs greater access to
finance, which should particularly favor the poor. Others
argue that improvements in the financial system primarily
benefit the rich and politically connected. The literature
has also been ambiguous about the channels through which
finance may be associated with lower poverty (deposits
versus credit). Looking at a sample of 37 countries in
Sub-Saharan Africa from 1992 through 2006, the paper
suggests that financial deepening is associated with lower
poverty through different channels depending on the strength
of property rights. In the absence of well-defined and
enforced property rights, wider access to saving and
risk-sharing instruments is accompanied by a reduction in
poverty. Only once property rights grow stronger is credit
associated with lower poverty. |
|---|