nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2008‒03‒25
two papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Financial Development and Poverty Reduction: Can There Be a Benefit Without a Cost? By Kangni Kpodar; Sylviane Guillaumont Jeanneney
  2. Central America's Regional Trends and U.S. Cycles By Shaun K. Roache

  1. By: Kangni Kpodar; Sylviane Guillaumont Jeanneney
    Abstract: This article investigates how financial development helps to reduce poverty directly through the McKinnon conduit effect and indirectly through economic growth. The results obtained with data for a sample of developing countries from 1966 through 2000 suggest that the poor benefit from the ability of the banking system to facilitate transactions and provide savings opportunities but to some extent fail to reap the benefit from greater availability of credit. Moreover, financial development is accompanied by financial instability, which is detrimental to the poor. Nevertheless, the benefits of financial development for the poor outweigh the cost.
    Date: 2008–03–19
  2. By: Shaun K. Roache
    Abstract: The economies of Central America share a close relationship with the United States, with considerable comovement of GDP growth over a long period of time. Trade, the financial sector, and remittance flows are all potential channels through which the U.S. cycle could affect the region. But just how dependent is growth in the region on the U.S.? Using the common cycles method of Vahid and Engle (1993), this paper suggests that the business cycle is dominated by the U.S.; region-specific growth drivers tend to be long-lasting shocks, rather than temporary fluctuations. The most cyclically sensitive countries include Costa Rica, El Salvador, and Honduras.
    Keywords: Economic integration , Central America , Costa Rica , El Salvador , Honduras , Trade , United States , Financial sector , Salary remittances ,
    Date: 2008–02–29

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