Does Financial Structure Matter for Poverty? Evidence from Developing Countries

Although there has been research looking at the relationship between the structure of the financial system and economic growth, much less work has dealt with the importance of bank-based versus market-based financial systems for poverty and income...

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Bibliographic Details
Main Authors:	Kpodar, Kangni, Singh, Raju Jan
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCESS TO CREDIT ACCESS TO EDUCATION ACCESS TO FINANCE ACCESS TO MARKETS ACCESS TO SERVICES ACCOUNTING ADVANCED COUNTRIES ADVERSE SELECTION AGRICULTURAL SECTOR AMOUNT OF COLLATERAL BAD BANKS BANK ASSETS BANK BRANCH BANK BRANCHES BANK CREDIT BANK LOANS BANK POLICY BANKING CONCENTRATION BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SECTOR EFFICIENCY BANKING SYSTEM BANKING SYSTEMS BASIC NEEDS BOND BORROWING CAPITAL ALLOCATION CAPITALIZATION CENTRAL BANKS CHILD LABOR CLEAN WATER COLLATERAL COMMERCIAL BANK COMMERCIAL BANK ASSETS COMMERCIAL BANKS CONSUMER PRICE INDEX CONTRACT ENFORCEMENT CORPORATE FINANCE COUNTRY COMPARISONS COUNTRY RISK CREDIT CONSTRAINTS CREDIT GROWTH CREDIT MARKET CREDIT MARKETS CREDIT RATIONING CREDITOR CREDITOR RIGHTS CURRENCY DEBT DEFAULTS DEPOSIT DEPOSIT INSURANCE DEPOSIT MONEY BANKS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DEVELOPING ECONOMIES DEVELOPMENT BANKING DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISCRIMINATION DISTRIBUTION OF INCOME DOMESTIC EQUITIES DOMESTIC EXCHANGES DURABLE DURABLE ASSETS EARNINGS ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC OPPORTUNITIES ECONOMIC PERFORMANCE ECONOMIC RESEARCH ECONOMIC THEORY EDUCATION LEVEL EMPLOYMENT ENROLMENT RATE ENTREPRENEUR ENTREPRENEURS EQUITY MARKETS EXPECTED RETURN EXPORTS FINANCIAL DEEPENING FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIARY FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL SECTOR DEVELOPMENT FINANCIAL SECTOR REFORMS FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL STUDIES FINANCIAL SYSTEM FINANCIAL SYSTEMS FIXED COST FORMAL FINANCIAL INSTITUTIONS FORMAL FINANCIAL SECTOR FUTURE EARNINGS GDP GDP PER CAPITA GINI COEFFICIENT GOVERNMENT EXPENDITURES GREATER ACCESS GROWTH MODELS HEALTH SERVICES HIGH INTEREST RATES HOUSEHOLD INCOME HOUSEHOLDS HOUSING HUMAN CAPITAL HUMAN DEVELOPMENT INCOME DISTRIBUTION INCOME INEQUALITIES INCOME INEQUALITY INCOME LEVELS INCOME VARIABILITY INCOMES INDIVIDUAL INVESTORS INEFFICIENCY INFLATION INFLATION RATE INFLATION RATES INFORMATION ASYMMETRIES INFORMATION ASYMMETRY INFORMATION ON BORROWERS INFORMATION SHARING INFRASTRUCTURE DEVELOPMENT INSTITUTIONAL DEVELOPMENT INSTITUTIONAL ENVIRONMENT INSTITUTIONAL REFORMS INSTRUMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK INTERNATIONAL FINANCIAL STATISTICS JOB CREATION JOB OPPORTUNITIES LABOR MARKETS LACK OF ACCESS LEGAL RIGHTS LEGAL SYSTEM LEGAL SYSTEMS LENDER LENDERS LIQUIDITY LOAN LOAN-TO-DEPOSIT RATIO LORENZ CURVE M2 M3 MACROECONOMIC ENVIRONMENT MACROECONOMIC VARIABLES MACROECONOMICS MARKET CONSTRAINTS MARKET EFFICIENCY MARKET LIQUIDITY MARKET VALUE MICRO DATA MICROFINANCE MIDDLE-INCOME COUNTRIES MONETARY FUND NET INTEREST MARGIN OVERHEAD COST OVERHEAD COSTS PER CAPITA INCOME POLITICAL ECONOMY POOL OF BORROWERS POVERTY ALLEVIATION PRICE STABILITY PRIVATE CREDIT PRIVATE PROPERTY PRIVATE SECTOR CREDIT PROBABILITY OF REPAYMENT PROFITABILITY PROPERTY RIGHT PROPERTY RIGHTS PRUDENTIAL REQUIREMENTS REMITTANCES RESOURCE ALLOCATION RETURN RISK DIVERSIFICATION RISK SHARING RULE OF LAW RURAL BANK RURAL BANK BRANCHES RURAL BANKS SAVINGS SHAREHOLDER SHAREHOLDER PROTECTION SKILLED WORKERS SMALL ENTERPRISES SOCIAL BANKING STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKET DEVELOPMENT STOCK MARKET DEVELOPMENTS STOCK MARKETS TRADE LIBERALIZATION TRANSACTION TRANSACTION COSTS TRANSPARENCY TURNOVER VILLAGES WAGE RATES WAGES WEALTH WORLD DEVELOPMENT INDICATORS
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111213133824 http://hdl.handle.net/10986/3685

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Summary:	Although there has been research looking at the relationship between the structure of the financial system and economic growth, much less work has dealt with the importance of bank-based versus market-based financial systems for poverty and income distribution. Empirical evidence has indicated that the structure of the financial system has little relevance for economic growth, suggesting that the same could be true for poverty since growth is an important driver in reducing poverty. Some theories, however, claim that, by reducing information and transaction costs, the development of bank-based financial systems could exert a particularly large impact on the poor. This paper looks at a sample of 47 developing economies from 1984 through 2008. The results suggest that when institutions are weak, bank-based financial systems are better at reducing poverty and, as institutions develop, market-based financial systems can turn out to be beneficial for the poor.

Does Financial Structure Matter for Poverty? Evidence from Developing Countries

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