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Financial development in the Caribbean
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Moises SCHWARTZ and Diether BEUERMANN (eds), Economic Institutions for a Resilient Caribbean, Washington DC : Inter-American Development Bank, 2021, pp. 499-554
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BECK, Thorsten Harald Leopold, MOONEY, Henry, Financial development in the Caribbean, in Moises SCHWARTZ and Diether BEUERMANN (eds), Economic Institutions for a Resilient Caribbean, Washington DC : Inter-American Development Bank, 2021, pp. 499-554 - https://hdl.handle.net/1814/76495
Abstract
An expansive literature has established the importance of deep, accessible, and efficient financial systems for economic development and poverty alleviation. Even though there is significant heterogeneity in this relationship across countries, the empirical evidence on the relationship between financial depth and economic growth points, on average, to a positive association. There is strong and mounting evidence that deeper and more efficient financial systems help to increase growth and reduce poverty and income inequality. Countries with higher levels of financial development (e.g., as measured by private credit as a proportion of GDP) experience higher per capita income growth rates over the long run. Evidence also suggests that financial deepening can help create jobs, particularly for developing countries, and that financial liberalization can lead to increased labor market participation, especially among low-skilled workers. There is also increasing evidence that financial development can help reduce income inequality and poverty. As in the case of finance and growth, the relationship does not necessarily come through a larger share of the population with access to credit, but rather through financial deepening that results in labor and product market effects that positively affect the poorer segments of the population.
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Published online: February 2021