Financial development and poverty reduction in developing countries

Abstract Empirical investigation of the link between financial development and economic growth has established that finance exerts a significant and positive influence on growth. This paper extends this line of analysis by examining the contribution that financial development makes to poverty reduction in low‐income countries. The results reported support the contention that financial sector development policy can contribute to achieving the goal of poverty reduction in developing countries. Copyright © 2002 John Wiley & Sons, Ltd.