Financial Development and Poverty Reduction in Developing Countries: The Role of Entrepreneurial Activity

Abstract

Summary: This study empirically examines links between financial development and poverty reduction in developing countries during the period 2000-2019, paying special attention to the role played by entrepreneurial activity. For this purpose, we apply fixed effects and random effects models with panel data by using different measures of incidence and intensity of poverty. Our results confirm that financial development is closely connected to poverty reduction, and provide new evidence on the importance of entrepreneurial activity in developing economies in terms of poverty mitigation and how entrepreneurship can modulate the relationship between financial development and poverty reduction. These findings involve significant policy implications that give entrepreneurship a prominent role in anti-poverty programs in developing countries.