Social Indicators Research

, Volume 141, Issue 1, pp 131–156 | Cite as

Financial Development, Institutional Quality and Poverty Reduction: Worldwide Evidence

  • Nasreddine Kaidi
  • Sami MensiEmail author
  • Mehdi Ben Amor


This paper tests the relationship between financial development, quality of institutions and poverty. To this end, we reviewed the literature and selected indicators of poverty, financial development and quality of institutions. Empirically, we used the three-stage least squares method to examine a sample of 132 countries observed over the 1980–2014 period. First, we proved that financial development does not improve the situation of the poor, while the effect of institution quality on poverty and financial development depends on the choice of indicators. Our robustness analysis pointed to the sensitivity of our results to the different financial development, quality of institutions and poverty indicators.


Financial development Quality of institutions Poverty 3SLS Simultaneous equation modeling 

JEL Classification

G20 I32 O17 


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© Springer Science+Business Media B.V., part of Springer Nature 2018

Authors and Affiliations

  1. 1.ESC-Business School of Tunis (ESCT)University of ManoubaManoubaTunisia
  2. 2.ECSTRA LaboratoryManoubaTunisia
  3. 3.Institute of Higher Business Studies (IHEC)University of CarthageTunisTunisia
  4. 4.IEI Linköping UniversityLinköpingSweden

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