The aim of this paper is to empirically analysewhether the level of institutional quality influences the effect of financial development on poverty for a sample of developing countries covering the period from 1984 to 2012, or not. Using an interaction term constructed as a product between financial development and institutional qualitywe find that the pro-poor impact of financial development decreases as the quality of institution rises. Such differential effect can be ascribed to the capacity of banks to provide functions that mimic those performed by a wellworking institutional framework.The results of this paper can be used for policy management.
G20, I32, 017
Financial development, institutions and poverty alleviation: an empirical analysis
KeywordsFinancial Development, Institutional Quality, Poverty Alleviation, Developing Countries