The Impact of Financial Crises on the Poor

Abstract

Financial crises have detrimental impacts on the economy via depressed economic growth and rising unemployment, however, their impact on the poorest in society is relatively under-researched. This paper investigates the impact of three different types of financial crises on the income of the poor. Using a variety of estimation techniques and controlling for a lagged dependent variable, the results suggest that currency crises are the most harmful to the poor, followed by banking crises. Debt crises only have a statistically significant effect on the income of the poor in richer countries.