ACCESS TO FINANCIAL SERVICES AND POVERTY REDUCTION IN DEVELOPING COUNTRIES

We use data from surveys on households and on banking regulation institutions to explore the impact of the access to financial services (AFS) on poverty, on a large sample of developing countries. Controlling for the presence of a possible endogeneity bias using the instrumental variable technique, we show that the AFS significantly reduces poverty. This result, which is robust to the use of alternative measures of AFS or poverty, and to the presence of many control variables, supports the need for an essential place of the AFS in the design of Poverty Reduction Strategies.