The Nexus of Financial Development, Macroeconomic Indicators, and Poverty in ASEAN Countries

Abstract

Poverty has always a concern of policy makers around the world, because it hinders the sustainable economic development. Poverty alleviation is one of the development goals that will be achieved, including in Southeast Asia. This study aims to analyze the determinants of poverty in ASEAN countries using the Vector Autoregression Model analysis, with an analysis period of 2017-2021. The results showed that the financial sector and macroeconomic variables of economic openness and inflation could influence poverty. In contrast, economic growth did not affect the poverty rate in ASEAN countries. The poverty rate was able to respond quickly since the shock in the financial sector and macroeconomic variables, except for the response to inflation which only emerged in the second year since the shock.