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Recent studies on the relationship between financial development and poverty have been inconclusive. Some claim that, by allowing more entrepreneurs to obtain financing, financial development improves the allocation of capital, which has a particularly large impact on the poor. Others argue that it is primarily the rich and politically connected who benefit from improvements in the financial system. This paper looks at a sample of 37 countries in sub-Saharan Africa from 1992 through 2006. Its results suggest that financial deepening could narrow income inequality and reduce poverty, and that s

Studies on the link between financial development and poverty have been inconclusive. Some claim that deeper financial sectors should improve the allocation of capital by allowing entrepreneurs greater access to finance, which should particularly favour the poor. Others argue that improvements in the financial system primarily benefit the rich and politically connected. The literature has also been ambiguous about the channels through which finance may be associated with lower poverty (deposits vs. credit). Looking at a sample of 37 countries in sub‐Saharan Africa from 1992 through 2006, the paper suggests that financial deepening is associated with lower poverty through different channels depending on the strength of property rights. In the absence of well‐defined and enforced property rights, wider access to saving and risk‐sharing instruments is accompanied by a reduction in poverty. Only once property rights grow stronger, is credit associated with lower poverty.

Studies on the link between financial development and poverty have been inconclusive. Some claim that deeper financial sectors should improve the allocation of capital by allowing entrepreneurs greater access to finance, which should particularly favor the poor. Others argue that improvements in the financial system primarily benefit the rich and politically connected. The literature has also been ambiguous about the channels through which finance may be associated with lower poverty (deposits versus credit). Looking at a sample of 37 countries in Sub-Saharan Africa from 1992 through 2006, the paper suggests that financial deepening is associated with lower poverty through different channels depending on the strength of property rights. In the absence of well-defined and enforced property rights, wider access to saving and risk-sharing instruments is accompanied by a reduction in poverty. Only once property rights grow stronger is credit associated with lower poverty.

Natural resources offer opportunities, but also bring challenges. They have generally been linked to a series of negative outcomes like economic decline, corruption, and conflict. Oil and minerals reserves, in particular, are often very spatially concentrated, and their discovery becomes a potential source of conflict between the governments, the people of the producing areas, and those of the rest of the country. But can this increased risk of conflict be prevented? Are there ways for the government to change this course of events? This paper tries to contribute to this discussion by looking at the international practices in raising and sharing natural resource revenues (NRR) among different levels of government. The study observes that sharing NRR with subnational governments of the producing areas is the prevailing practice worldwide. There is a rationale to compensate the subnational government of the producing areas for the negative environmental, social, and economic impact of production activities. Assignment to all - including the non-producing - subnational governments is less frequent, although it is increasingly used (particularly in Latin America). This option increases the number of stakeholders and gives them incentives to exert control. This is a relevant argument, particularly in countries with a weak capacity of public scrutiny of government activities. The volatility of revenue or the low absorption capacity of small government units may nevertheless create problems. Similarly, the allocation of NRR to individuals with direct transfers, a complement to the intergovernmental allocation rather than an alternative, can increase the welfare of citizens by increasing their scrutiny of NRR use by government.

This Systematic Country Diagnostic seeks to identify the most important constraints to and opportunities for inclusive and sustainable growth in Haiti, a country that is one of the poorest and least equal countries in the world. For this purpose, an extensive review of the literature (from both within and outside the World Bank) was carried out, as well as broad consultations across the country. The results point out five broad themes around which activities need to be organized in order to ignite a process whereby Haiti could set itself on a new development path: (i) balancing macroeconomic stability with developmental needs; (ii) improving statistics and analytics; (iii) creating greater economic opportunities and better jobs, including through infrastructure and human capital; (iv) (re)building the social contract; and (v) reducing vulnerabilities and building resilience. Progress on all these themes is needed simultaneously. In light of the tighter budget constraints facing the government, maintaining the stability of the macroeconomic environment, and improving knowledge and statistics to increase the effectiveness of public policy (including more transparent fiscal reporting) call more particularly for immediate attention.

Haiti's economic development has been held back by a history of civil conflict and violence. With donor assistance declining from its exceptional levels following the 2010 earthquake, and concessional financing growing scarce, Haiti must learn to live with tighter budget constraints. At the same time, the United Nations forces that have provided security in the past decade are scaling down. Against this backdrop, this paper explores the conditions under which public spending can minimize violent conflict, and draws possible lessons for Haiti. Drawing on an empirical analysis of 148 countries over the period 1960-2009, simulations for Haiti suggest that increases in military spending would be associated with a higher risk of conflict, an observation in line with Haiti's own history. Greater welfare expenditure (education, health, and social assistance), by contrast, would be associated with lower risk of conflict.