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      The nexus between financial development and poverty reduction in Egypt

      Review of Economics and Political Science

      Emerald Publishing Limited

      Poverty, Egypt, ARDL, Financial development, G20, E40, D90, C22

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          Abstract

          Purpose

          The purpose of this study is to empirically examine the impact of financial development on poverty reduction in Egypt. The paper also investigates whether financial development affects poverty via gross domestic product (GDP) growth.

          Design/methodology/approach

          This study uses the autoregressive distributed lag approach to estimate two specifications. The first is dependent on poverty by the ratio domestic credit to the private sector (percentage of GDP) and the second is dependent on the poverty by the ratio liquid liabilities to GDP or M3/GDP. The data are annual and cover the period from 1980 to 2015.

          Findings

          In long run, the study finds that relationship between economic growth and poverty is bidirectional. Financial development and poverty (household final consumption expenditure per capita) are complementary as bidirectional (in Granger sense). In short run, the study finds the bidirectional causality between financial development (real domestic credit to private sector per capita) and poverty reduction.

          Practical implications

          The findings suggest that governments should remove policies that impede the ability of banks to offer loan products or undermine the commercial incentive structure for banks or borrowers. It is crucial to enhance the role of specialized state-owned banks in financial intermediation.

          Social implications

          Several attempts have been made to investigate the relationship between financial development and other macroeconomic variables, but few studies have examined the impact of financial development on poverty reduction. Furthermore, the majority of the previous studies are based on Asia and Latin America – affording Egypt very little or no coverage at all.

          Related collections

          Most cited references 79

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          Finance and Growth: Schumpeter Might Be Right

           R King,  R. Levine (1993)
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            Efficient Tests for an Autoregressive Unit Root

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              Financial Development, Growth, and the Distribution of Income

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                Author and article information

                Contributors
                Journal
                REPS
                10.1108/REPS
                Review of Economics and Political Science
                REPS
                Emerald Publishing Limited
                2631-3561
                31 July 2018
                : 3
                : 2
                : 40-55
                Affiliations
                Higher Institute for Computer Science and Information Systems , Giza, Egypt
                Author notes
                Vivian Bushra Kheir can be contacted at: vivianboshra@gmail.com
                Article
                615903 REPS-07-2018-003.pdf REPS-07-2018-003
                10.1108/REPS-07-2018-003
                © Vivian Bushra Kheir.

                Published in Review of Economics and Political Science. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

                Page count
                Figures: 1, Tables: 4, Equations: 2, References: 90, Pages: 16, Words: 7985
                Categories
                research-article, Research Paper
                cat-ECO, Economics
                cat-IECO, International economics
                Custom metadata
                Yes
                Yes
                JOURNAL
                excluded

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