Affect of Financial Development on Poverty in Iraq for the Period 1980-2010

	Affect of Financial Development on Poverty in Iraq for the Period 1980-2010
journal of Economics And Administrative Sciences/ University of baghdad
Article 1, Volume 20, Issue 79, 2014, Pages 233-254
Abstract
There are many applied Economic studies have found positive nexus between the financial development and poverty reduction in the developing countries. Iraq has witnessed increasing rate of the poverty during the period 1980-2010 due to many internal and external factors such as wars, economic sanctions, inflation, high rate of unemployment, and political and security instability. Therefore, the investigation about the solutions to reduce poverty becomes very necessary, and the enhancing the financial development in Iraq is one of these options. This is due to that the financial development could reduce the poverty rates through two channels: the first is directly via the offering of the loans and other financial facilities to the poor, and second is indirectly through intermediate mean which is the economic growth. Whereas the financial development contributes in spurring economic growth through mobilization of savings and channel them to the most efficient uses with higher economic and social returns. In addition, the economic growth reduces the poverty through two channels. The first is direct by increasing the introduction factors held by poor and improve the situations into the sectors and areas where the poor live. The second is indirect through redistribution the realized incomes from the economic growth as well as the realized incomes from the government revenues which can be used to transfer the payments and improve the living standard. However, the study found that neither the financial development nor the economic growth contributed in the poverty reduction in Iraq during the period 1980-2010, and there were other factors could reduce the poverty in Iraq such as the low rate of inflation, low rate of unemployment and the political and security stability.
Keywords
financial development; poverty Reduction; Economic Growth

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