Impact of Financial Crises on Poverty in Developing World: An Empirical Approach

28 Pages Posted: 3 Nov 2010

Date Written: November 2, 2010

Abstract

In this paper, we adopt a cross-country perspective to analyze the short term effects of currency, banking and debt crises on poverty. We employ multivariate fixed effects panel data analysis in order to examine whether and to what extent different types of financial crises impact the poverty headcount ratio and the poverty gap (as measured by the World Bank). Our findings suggest that out of the three categories of financial crises we identify, it is currency crises that most significantly exacerbate both the incidence and depth of poverty in the short run. We find evidence that banking crises are associated with an increase in the depth of poverty but not the incidence (however this effect tends to be short-lived), while, our analysis shows no direct effect of sovereign debt crises on short term poverty.

Keywords: poverty, currency crises, banking crises, debt crises, developing countries

JEL Classification: O1

Suggested Citation

Nikoloski, Zlatko, Impact of Financial Crises on Poverty in Developing World: An Empirical Approach (November 2, 2010). Available at SSRN: https://ssrn.com/abstract=1701894 or http://dx.doi.org/10.2139/ssrn.1701894

Zlatko Nikoloski (Contact Author)

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

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