The Effect of Sectoral Growth and Financial Development on Poverty Using the ARDL Approach (Case Study: Lorestan Province)

Subject Areas : Financial Economics

Mohammad Malekshahi ¹ , Darioush Hassanvand ² , Younes Nademi ³ , Hamid Esaish ⁴

1 - Islamic Azad University, Aligudarz Branch, Department of Economics
2 - Department of economics, Lorestan University.Iran. Khoramabad
3 - Assistant Professor of the Department of Economics, Ayatollah Borujerdi University
4 - Department of Economics, Faculty of Economics, Ayatollah Borujerdi University, Borujerd. Iran

Received: 2022-11-15 Accepted : 2024-10-28

Keywords: Sectoral Growth, Financial Development, Poverty, ARDL Approach, Lorestan Province,

Abstract :

Reducing poverty has always been one of the most important economic and political priorities of countries. One of the most important ways to reduce poverty is economic growth, which can reduce poverty and income inequality in society, but achieving economic growth requires the use of several factors, including capital, human power, energy, etc. For this reason, paying more and more attention to financial markets, which can be one of the important means of financing economic institutions and enterprises, will definitely be able to become the basis for increasing economic growth and ultimately lead to the reduction of poverty. Therefore, the purpose of this study is the effect of sector growth (agriculture, industry and services) on the poverty index of Lorestan province. In order to estimate the research model, the annual data during the period of 1981-2020 and the ARDL econometric model have been used. The results show that in the long term, the growth of the industry and service sectors reduces poverty in Lorestan province, while the growth of the agricultural sector does not show a significant effect on poverty reduction. Also, the results showed that the development of the financial index also reduces poverty in Lorestan province. So that financial development through direct access of low-income people to credits, causes the expansion of the business of these people and increases their purchasing power, or at least, it fights poverty through optimal savings, which can reduce poverty as a result of these events.