Do Workers’ Remittances Promote Financial Development in Sub-Sahara Africa Countries?

Ojapinwa, Taiwo V.; Bashorun, Oladipo T.

doi:10.5430/ijfr.v5n2p151

Cited by 17 publications

(6 citation statements)

References 24 publications

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“…illustrates the relationship between remittance inflows to Vietnam and credit and deposit growth, both of which represent the extent of financial development in Vietnam. These are shown to be positively related, implying that the research findings based on the Granger causality and VAR model are fairly agreeable with those suggested in earlier studies on the nexus between remittances and financial growth such as Orozco and Fedewa (2005), Giuliano and Ruiz-Arranz (2009), Munduca (2009), Gupta et al (2007), Aggarwal et al (2011), Sami (2013), and Ojapinwa and Bashorun (2014).…”

Section: Resultssupporting

confidence: 86%

“…The findings in Orozco & Fedewa (2005) are further reinforced by those suggested in the subsequent studies of Munduca (2009), Gupta et al (2009), Sami (2013), and Ojapinwa and Bashorun (2014), besides Giuliano and Ruiz-Arranz (2009), who assert that remittances can promote financial sector development, particularly in financially less developed economies, and Aggarwal et al (2011), who found that increases in remittances may induce those in the aggregate volume of deposits as well as credit intermediated by financial institutions, thereby fostering financial sector development.…”

Section: Reviews Of Earlier Studies On the Impact Of Remittances On Fmentioning

confidence: 79%

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Impact of Remittances on Financial Development in Vietnam

Hoanh¹

2015

JABES

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This study focuses on the impact of remittances on Vietnam’s financial development. The results drawn from its quantitative approach demonstrate that although remittance flows to the country may lead to increase in bank deposits, such increase is not high. On the other hand, reduction in credit demands may be subject to remittance flows, per the financial development based on a few credit growth indicators. In other words, effects of remittance flows, as indicated by VAR model, are not noticeable despite their positive impact, as in examples of increased deposits and remittance payment services on their current growth. Based on these findings, the study suggests several implications that improve the positivity of impact on the financial development.

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Section: Resultssupporting

confidence: 86%

Section: Reviews Of Earlier Studies On the Impact Of Remittances On Fmentioning

confidence: 79%

Impact of Remittances on Financial Development in Vietnam

Hoanh¹

2015

JABES

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“…This means that workers’ remittances increase the money supply and this tends to overheat the economy by way of fuelling expansion of aggregate demand. While the findings are in contrast with the result of Efobi et al () who reported that remittance has an inverse relationship with bank breadth, it supports the findings of Giuliano and Ruiz‐Arranz (), Osabuohien and Efobi (), Rabbi et al () and Ojapinwa and Bashorun () who conclude that large inflows of income from workers’ remittances create wealth for an economy by increasing the depth of the domestic financial system. It further supports our theoretical argument that a surge in remittance inflows to an economy may lead to higher disposable income and trigger an expansion in aggregate demand (Corden and Neary, ).…”

Section: Presentation Of Results and Discussionsupporting

confidence: 73%

Workers’ Remittances and the Dutch‐Disease Argument: Investigating the Relationship in Sub‐Saharan Africa

Ojapinwa¹,

Nwokoma²

2018

African Development Review

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Based on the Salter-Swan-Corden-Dornbusch framework, which argues that capital inflows may appreciate the official exchange rate by aggravating the effects of any previously existing domestic distortions, this paper examines the claim that workers' remittances cause the Dutch disease in sub-Saharan Africa (SSA). Specifically, the study investigates whether remittances cause financial overheating and spending effects. The study adopts the dynamic panel instrumental variable system generalized method of moment (IVSGMM). This study finds that although workers' remittances cause financial overheating, they neither increase general spending nor appreciate the real exchange rate, thereby implying that workers' remittances do not cause the Dutch disease in SSA from 1996 to 2013. These findings suggest that governments should establish diaspora incentive schemes so as to encourage remitters and recipient households' to invest productively. Government efforts should be integral at improving the financial education for remitters and the recipient households so as to avoiding channelling overheating effects to spending effects and to the Dutch disease.

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“…Aggarwal et al (2011) reported a positive impact of remittances on financial development in the case of 109 developing countries between 1975 and 2007. Other authors that have confirmed the positive linkage between remittances and financial development include (Chowdhury, 2011) for Bangladesh over the period of 1971 to 2008; Oke (2011) in the Nigerian context for the period of 1997 and 2009; Ojapinwa and Bashorun (2014) for 32 sub-Saharan African (SSA) countries between 1996 and 2010, and Shahzad et al (2014) in the context of South Asia over the period of 1989 to 2011. In terms of causality between remittances and finance, there were mixed results.…”

Section: Empirical Literature Reviewmentioning

confidence: 90%

Nexus between Foreign Remittances and Economic Growth in Nigeria: Role of the Financial Sector

Garba¹,

Adekunle²,

Adeniyi³

2020

Asian Journal of Economics and Empirical Research

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In recent times, the economic growth literature is becoming more interested in the macroeconomic impacts of foreign remittances. This focus could be because foreign remittances now constitute the largest source of foreign capital flows for developing countries next to foreign direct investment (FDI). To this end, the present study analyzed the possible role of the financial sector in the nexus between foreign remittances and economic growth in Nigeria over the period of 1981 to 2015. To circumvent the possible endogeneity problem among foreign remittances, financial development and economic growth, we employed the two-stage least squares (2SLS) technique. Unlike the previous findings, we offered new evidence that the complementarity or substitutability between foreign remittances and financial development in promoting Nigeria's economic growth depends on the indicators of financial development used. We confirmed the complementary hypothesis in the case of the quantitative indicators of financial development, while we validated the substitutability hypothesis in favour of its qualitative measure. Both migrant workers and their beneficiaries should be encouraged to make use of banks so that foreign remittances could be made available to finance genuine investments. This could be possibly achieved through boosting the confidence of migrant workers in the domestic financial system and by raising the deposit rate so as to entice the beneficiaries to save a large chunk of remittances received.

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Do Workers’ Remittances Promote Financial Development in Sub-Sahara Africa Countries?

Cited by 17 publications

References 24 publications

Impact of Remittances on Financial Development in Vietnam

Impact of Remittances on Financial Development in Vietnam

Workers’ Remittances and the Dutch‐Disease Argument: Investigating the Relationship in Sub‐Saharan Africa

Nexus between Foreign Remittances and Economic Growth in Nigeria: Role of the Financial Sector

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