How Catalytic Is Digital Technology in the Nexus between Migrants’ Remittance and Financial Development in Sub-Saharan African Countries?

Abstract

Given the indisputable roles of remittance and financial development in countries’ economic performance, enhancing the nexus between the two variables has become pertinent. The remittance–financial development literature has surged, with a growing argument that making the relationship work is conditioned on mediating roles of certain economic indicators. Despite the overwhelming evidence of the transformative roles of digital technology, the assessment of its possible mediating role in the remittance–financial development nexus is lacking in the literature. Hence, using pooled data of 35 Sub-Saharan African (SSA) countries sourced from the World Bank’s Development Indicators, this study examined the mediating effect of digital technology in the relationship between remittance inflows and financial development. Using two indicators of ICT—fixed broadband and mobile cellular subscription—the results of the generalized method of moment analysis suggest that digital technology spurs remittance inflows to promote financial development in SSA. The results are consistent for both measures. These findings imply that remittance and digital technology are complementary in promoting financial development in the sub-region. Based on these outcomes, the study therefore advances the enactment of policies aimed at fostering diffusion of digital technology and achieving the sustainable development goal’s recommendation of lower transaction cost of remittances.

Does Urban Digital Construction Promote Economic Growth? Evidence from China

“…The digital economy represents a novel economic paradigm in human history, succeeding agriculture and industry (Laitsou et al 2020;Williamson 2022;Yang et al 2023d). In the course of social production, the digital economy places data resources as a crucial production factor, utilizing modern information networks for various socio-economic activities, continuously optimizing production efficiency, and enhancing development quality through the progressive advancement of information and communication technology (Allcott et al 2022;Fernandes et al 2023;Jemiluyi and Jeke 2023;Jensen 2007). Consequently, the digital economy not only profoundly alters the developmental patterns of traditional production processes but also exerts a far-reaching impact on various facets of the socioeconomic domain (Beraja et al 2023a;Cahyadi and Magda 2021;Karle et al 2020;Loebbing 2022;Maresova et al 2018).…”

Remittance inflows in a digital economy: A Sub-Saharan African experience

“…Owing to its enormous roles in achieving various macroeconomic development outcomes, remittance inflows is particularly important for developing countries. Aside from provision of lifeline for millions of households, remittance inflows spur inclusion and growth in the financial sector (Agarwal et al, 2011;Anzoategui et al, 2014;Jemiluyi and Jeke, 2023a), reduces inequality and poverty (Arapi-Gjini et al, 2020;Azizi et al, 2021), fuel domestic investment (Asongu and Odhiambo, 2020) thereby promoting industrialization with attendant improvement in the economic performance of developing countries (Dridi et al, 2019;Ekanayake et al, 2020;Francois et al, 2022).…”

“…Thus, there has been a renewed call for digitalization of remittances flow (Nicoli and Ahmad, 2019;Bersch et al, 2021;Raithatha et al, 2021). Digitalization of remittance spurred by development in ICT has not only led to substantial cut in cost of remittance, it also facilitates convenience, saves time, enhances trust thereby promoting development in the financial sector (Nicoli and Ahmed, 2019;Raithatha et al, 2021;Jemiluyi and Jeke, 2023a). Therefore, we are making contribution to the remittance literature by investigating the relationship between diffusion of digital technology and remittance inflows in sub-Saharan Africa (SSA).…”