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Impacts of remittances on financial development

Author

Listed:
  • SeyedSoroosh Azizi
Abstract
Purpose - The purpose of this paper is to examine the impacts of international remittances on financial development in developing countries. Design/methodology/approach - The focus is on a panel of 124 developing countries for the period 1990–2015. The empirical evidence is based on the instrumental variable-fixed effect model. Findings - Results obtained in this study indicate that a 10 percent increase in the remittance to GDP ratio leads to 1.7 percent increase in domestic credit to private sector, 1.9 percent increase in bank credit, 1.2 percent increase in bank deposit, and 0.8 percent increase in liquid liabilities. The positive impact of remittances on financial development in developing countries is particularly important because financial development fosters long-run growth and reduces poverty. Originality/value - To address the endogeneity of remittances, the study estimates bilateral remittances and use them to create weighted gross national income per capita and real interest rates of remittance-sending countries. To the best of the author’s knowledge, this is the first study to assess the endogeneity of remittances in this way.

Suggested Citation

  • SeyedSoroosh Azizi, 2020. "Impacts of remittances on financial development," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(3), pages 467-477, February.
    • Handle: RePEc:eme:jespps:jes-01-2019-0045
    DOI: 10.1108/JES-01-2019-0045
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    Citations

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    Cited by:

    1. Abdul, Daud & Wenqi, Jiang & Tanveer, Arsalan, 2022. "Environmental stewardship: Analyzing the dynamic impact of renewable energy, foreign remittances, and globalization index on China's CO2 emissions," Renewable Energy, Elsevier, vol. 201(P1), pages 418-425.
    2. Mduduzi Biyase & Yourishaa Naidoo, 2023. "The Symmetric and Asymmetric Effect of Remittances on Financial Development: Evidence from South Africa," IJFS, MDPI, vol. 11(1), pages 1-17, January.
    3. Arvian Triantoro & Muhammad Zaheer Akhtar & Shiraz Khan & Khalid Zaman & Haroon ur Rashid Khan & Abdul Wahab Pathath & Muhamad Amar Mahmad & Kamil Sertoglu, 2023. "Riding the Waves of Fluctuating Oil Prices: Decoding the Impact on Economic Growth," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 34-50, March.
    4. Iffath Unissa Syed, 2021. "Remittance Flows from Healthcare Workers in Toronto, Canada," Sustainability, MDPI, vol. 13(17), pages 1-18, August.
    5. Olufunmilayo Olayemi Jemiluyi & Leward Jeke, 2023. "How Catalytic Is Digital Technology in the Nexus between Migrants’ Remittance and Financial Development in Sub-Saharan African Countries?," Economies, MDPI, vol. 11(3), pages 1-12, February.
    6. Tayyaba Rani & Feng Wang & Fawad Rauf & Qurat ul Ain & Hamid Ali, 2023. "Linking personal remittance and fossil fuels energy consumption to environmental degradation: evidence from all SAARC countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(8), pages 8447-8468, August.
    7. Imran Khan & Darshita Fulara Gunwant, 2023. "Is the remittance inflow to the Turkish economy sustainable? A glimpse of the future through the lens of the past," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 25(1), pages 34-51, June.
    8. Ma, Yechi & Chen, Zhiguo & Shinwari, Riazullah & Khan, Zeeshan, 2021. "Financialization, globalization, and Dutch disease: Is Dutch disease exist for resources rich countries?," Resources Policy, Elsevier, vol. 72(C).
    9. Boburmirzo Ibrokhimov & Rashid Javed & Mazhar Mughal, 2023. "Migrants remittances and fertility in the Post-Soviet states," Post-Communist Economies, Taylor & Francis Journals, vol. 35(6), pages 574-596, August.
    10. Rodrigo Carrillo & Pablo Cotler, 2021. "Impacto de las remesas sobre la inclusion financiera: el caso de Mexico," Sobre México. Revista de Economía, Sobre México. Temas en economía, vol. 2(4), pages 179-197.
    11. Md. Qamruzzaman, 2023. "Does Environmental Degradation-Led Remittances Flow? Nexus between Environmental Degradation, Uncertainty, Financial Inclusion and Remittances Inflows in India and China," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 9-26, March.
    12. Elham Jafarzadeh & He Shaquan & Bambi Prince Dorian Rivel, 2021. "The Impact of the COVID-19 Crisis on the Remittance of the Migrants Transfer of Funds in Central Africa," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(8), pages 1-60, August.
    13. Haojue Zhang & Yifu Sun & Changyu Meng, 2023. "Sustainable Urban Competitiveness from a Financial Development Perspective: An Empirical Study of China," Sustainability, MDPI, vol. 15(5), pages 1-18, February.
    14. Valentina Rotondi & Francesco C. Billari, 2022. "Mobile Money and School Participation: Evidence from Africa," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 41(1), pages 343-362, February.

    More about this item

    Keywords

    Migration; Remittances; Financial development; Developing countries; F22; F24;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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