Financial Development and Poverty Reduction in Crisis Periods: Panel Data Evidence from Six Countries of ECOWAS

In this study, we analyze the direct effect of financial development on poverty in crisis periods for a panel of Economic Community of West African States (ECOWAS) sample composed of six countries (Ivory Coast, Senegal, Gambia, Ghana, Mali and Benin) during the period 1996–2015, using econometric tests and static panel data. The main empirical result of this paper is that the financial development indicators and poverty proxies are significant and negatively correlated. The findings support the fact that financial development reduces directly poverty by increasing access for poor population to various sources of financing. As a result, finance makes transactions easier, provides opportunities for smoothing consumption and asset accumulation, and enables poor households to cope better with shocks, thus reducing the risk of recrudescence into poverty