Financial development and poverty reduction in emerging market economies

Poverty reduction is one of the key challenges in the globalized world. This study investigates the relationship between financial development and poverty reduction in emerging market economies during the period 1993-2012. The Carrion-i-Silvestre, del Barrio-Castro, and Lopez-Bazo (2005) panel unit root test and the Basher and Westerlund (2009) cointegration test was applied considering the cross-sectional dependence and multiple structural breaks in the study period. The findings indicated that financial development, including banking sector development and stock market development, had a significant positive impact on poverty reduction in emerging market economies. Key words: Financial development, Poverty reduction, Multiple structural breaks, Panel cointegration.JEL: G20, I32, O16. Smanjenje siromastva je jedan od kljucnih izazova u globalizovanom svetu. Ova studija istražuje odnos između finansijskog razvoja i smanjenja siromastva u tržisnim ekonomijama u razvoju u periodu između 1993-2012. Carrion-i-Silvestre, del Barrio-Castro, and Lopez-Bazo (2005) panel testovi jedinicnog korena i Basher and Westerlund (2009) kointegracioni test je je primenjen s obzirom na zavisnost između poprecnih preseka i s obzirom na visestruke strukturne lomove u periodu istraživanja. Nalazi su pokazali da je finansijski razvoj, ukljucujuci razvoj bankarskog sektora i razvoj berzanskog tržista, imao znacajan pozitivan uticaj na smanjenje siromastva u tržisnim privredama u razvoju. Kljucne reci: Finansijski razvoj, Smanjenje siromastva, Visestruki strukturni lomovi, Panel kointegracija.