The Effects of Financial Development on Relative Poverty in Iran: Evidence from the Smoothing Transmission Regression Model (STR)

The purpose of this paper is to examine the effects of financial development on poverty in Iran. In this study, we used the indicators of the stock market and the money market to examine the effect of financial development on poverty. In order to test the relationship between variables, a smoothing transmission regression model was used for the period 1989-2016 The results of the model estimation, while confirming the nonlinear impact of financial development on poverty, indicate that Financial development indicators affect the poverty of Iran in the form of a dual regime. So that in the domains of economic growth less and more than 2. 9 percent the impact of financial development indicators on poverty is different and significant. The results indicate that the financial development variable in the banking sector has a negative and significant effect on poverty. In other words, an improvement in the financial development situation in the banking sector has led to a reduction in poverty in the community, But financial development in the capital market has had fewer effects on poverty reduction than financial development in the monetary sector.