Financial Development, Growth and Poverty: How Close are the Links? [chapter]

Patrick Honohan
2004 Financial Development and Economic Growth  
The causal link between finance and growth is one of the most striking empirical macroeconomic relationships uncovered in the past decade. As this branch of the literature matures, the focus shifts from growth to other aspects of economic prosperity and from financial depth to multidimensional measures of financial development. This paper reviews the evolution of the literature and contributes by (i) showing that financial depth is negatively associated with headcount poverty, even after taking
more » ... , even after taking account of mean income and inequality; (ii) illustrating the pitfalls in equating financial development with financial depth and (iii) proposing alternative measures of financial development that, though summary, capture its multidimensional nature.
doi:10.1057/9780230374270_1 fatcat:3sgs5lvh4bdnxdmssd2manqo24