The Impact of the Coronavirus (Covid-19) Crisis on Poverty and The Effectiveness of Financial Development in Reducing Poverty

: An Empirical Analysis of Developing Countries

Abstract

Poverty is a critical concern faced by all societies. Though Covid-19 began as a health
crisis, economic downturns have resulted in catastrophic economic and social
consequences, particularly in developing countries already made vulnerable by pre-existing
poverty and inequality problems. Developing countries faced complex trade-offs because
of their vulnerabilities when considering fiscal burdens over effective exit strategies, with
recovery strategies in many countries being limited by shortages and financial gaps. In such
cases, the financial system might be vital for reducing poverty and supporting the
vulnerable. This thesis, a macroeconomic study, aims to provide a multilateral assessment
of poverty and inequality in developing countries, analyses the impact of Covid-19 on
poverty and examines the effectiveness of financial development policies in reducing
poverty and the adverse effects of Covid-19. The thesis examines a comprehensive database
of thirty developing countries from six regions, over twenty years (2000-2019). The study
has been divided into two main parts. Part I assesses poverty and financial development,
and interaction among growth, inequality, and poverty (GIP Triangle). Part II provides the
level of exposure to Covid-19, vulnerability/ resilience analysis, poverty projection, and a
regression analysis between financial development and poverty. Results indicated that the
Covid-19 crisis reversed decades of poverty reduction progress. The findings of this thesis
indicate that the negative impacts of Covid-19 were severe for all developing countries,
however, to varying degrees. Financial development, especially financial access and perspective on poverty and the impact of Covid-19, reviewing historical data and projecting
its future impacts on developing countries, demonstrating their vulnerability and resistance.
It presents a framework for inclusive and sustainable socioeconomic development
approaches to increase resilience for future shocks and crises, highlighting the importance
of effective financial development policies to alleviate poverty.
efficiency, plays a crucial role in reducing poverty. This thesis offers a multidimensional

Date of Award	2023
Original language	English
Awarding Institution	Aberystwyth University