The Theory And Eempirical Analysis On Financial Development And Poverty Alleviation:

Poverty is a worldwide problem,especially in Latin American countries which are in the"middle-income trap".Urban poverty problem,which is produced by radical financial liberalization reform,is particularly prominent in these countries.This article reviews scholars'researches about relationships between financial development and poverty alleviation.Based on these researches,I analyses the mechanism of financial development on poverty.The article selected three countries as cases:Chile,which is succeed in financial liberalization reform;Brazi,which is undergoing serious poverty problem;Mexican,which has strong economic strength.Analysis the influence of financial liberalization reform on poverty since 1970s in these countries,and found financial liberalization reform in these countries leaded new poverty,urban poverty is growing rapidly.The article collected 12 Latin American countries' data from 1997-2012,using the error correction model(ECM)examined the relationship between financial liberalization and poverty in Latin America.The result is same with the theory that discussed before.Financial development deepened poverty in Latin America.The reason is Latin America's financial development pursuit financial aggregates,regardless of financial structure.And,most commercial bank have been privatization,which is pursuing their own profit instead of providing financial services to the poor.This make the poverty problem in these countries fall into a "vicious circle".Though financial development in Latin America cannot bring poverty alleviate,it still play a role on poverty based on the theory and empirical analysis.In order to make positive impact on poverty,government should establish diversified poverty alleviation,continue pushing forward financial reform,and strengthen financial regulation.