Financial Sector Development and Poverty Reduction
Financial sector development is an effective instrument that can bring reduction in poverty. Financial sector can be developed by four different ways, by improving efficiency of the financial sector, by increasing range of financial sector, by improving regulation of the financial sector and by increased accesses of more of the population to the financial services.For estimating effect of financial sector development on poverty we divided financial sector into four sectors, Banking sector, Insurance companies, Stock market and Bond market. Gini= f (Banking sector, Insurance companies, Stock market and Bond market) For banking sector, we used variables, central bank assets to GDP, deposits money banks assets to GDP, bank deposits, concentration, overhead costs and net interest rate. For insurance company we used variable non life insurance, to capture the effect of stock market variable stock market turnover ratio used.For bond market both market capitalization to GDP and public bond market capitalization to GDP are used.This study attempts to make analysis of the relationship between financial sector development and poverty for different countries. Growth depends on financial sector development and poverty depends on growth, here the negative relation of poverty and financial sector development tested.
