Impact of financial crises on poverty in developing world: an empirical approach

Abstract

Abstract This paper adopts a cross-country perspective to analyze the short term effects of currency, banking and debt crises on the poverty headcount ratio and the poverty gap, employing multivariate fixed effects panel data analysis. The findings suggest that currency crises most significantly exacerbate both the incidence and depth of poverty in the short run. Banking crises are associated with an increase in the depth of poverty but not the incidence while there is no direct effect of sovereign debt crises. Given the low level of significance, the results are far from conclusive and offer only partial indications of the crises-poverty nexus.