Remittances and financial development in Latin America and the Caribbean countries: A dynamic approach

Fromentin, Vincent

doi:10.1111/rode.12368

Cited by 39 publications

(22 citation statements)

References 39 publications

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“…The estimated coefficient of inflation rate shows that 1% increases in the inflation rate decreases the FD in Sri Lanka by 0.49%. The finding of this study is consistent with the studies of Bittencourt (2011), Abbey (2012, Ozturk and Karagoz (2012), Almalki and Batayneh (2015), Khan (2015), Tinoco Zermeño et al (2018 and Fromentin (2018).…”

Section: Cointegration Testsupporting

confidence: 93%

Empirical relationship between workers' remittances and financial development (an ARDL cointegration approach for Sri Lanka)

Aslam¹,

Sivarajasingham

2020

IJSE

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PurposeThe purpose of this study aims to investigate the nature of the relationship between workers' remittances and financial development (FD) in Sri Lanka for the period from 1975 to 2017.Design/methodology/approachThis study used both the exploratory data analysis and inferential data analysis (IDA) techniques to test the objective of this study. The IDA technique consisted of the augmented Dickey–Fuller (ADF) and Phillips–Perron unit root tests, the autoregressive distributed lag (ARDL) bounds cointegration technique, the Granger causality test and impulse response function analysis.FindingsThe unit root test results show that the variables are in mixed order. The empirical results of cointegration confirm that workers' remittances have a beneficial long-run relationship with FD in Sri Lanka. The Granger causality test result indicates that there is a bidirectional relationship between workers' remittances and FD. The impulse response analysis indicates that a positive shock to workers' remittance has an immediate significant positive impact on the FD of up to 10 years.Practical implicationsThe analytical techniques used in this study explain how workers' remittances induce FD in Sri Lanka.Originality/valueThis study fills an important gap in the academic literature by using newly developed ARDL bounds cointegration techniques in Sri Lanka, by using impulse response function analysis, and by studying the dynamic relationship between workers' remittances and FD using time series data.

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Section: Cointegration Testsupporting

confidence: 93%

Empirical relationship between workers' remittances and financial development (an ARDL cointegration approach for Sri Lanka)

Aslam¹,

Sivarajasingham

2020

IJSE

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“…Brown et al (2013), by using macro-level data, find that remittances do not increase domestic credit to the private sector, and, if anything, the effect seems to be negative. Fromentin (2018) finds a positive, significant, and robust bidirectional link between remittances and financial development for the panel of 32 Latin American and the Caribbean countries.…”

Section: Remittances and Financial Developmentmentioning

confidence: 85%

Impacts of remittances on financial development

Azizi

2020

JES

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PurposeThe purpose of this paper is to examine the impacts of international remittances on financial development in developing countries.Design/methodology/approachThe 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.FindingsResults 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/valueTo 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.

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“…For instance, Cooray (2012) finds that remittances increase financial sector size more in countries with a low level of government ownership of banks than in countries with a high level of government ownership. The results of Fromentin (2018) suggest a non-linear effect of remittances on bank intermediation. Some studies find no support for the view that remittances stimulate financial development.…”

Section: Remittancesmentioning

confidence: 88%

“…However, other studies report a non-significant effect (e.g. Stulz and Williamson, 2003;Chinn and Ito, 2006;De Bonis and Stacchini, 2009), or even a negative effect (Gries et al, 2009;Kim et al, 2011;Fromentin, 2018). 13 Several studies have examined the impact of capital account openness on financial development.…”

Section: Trade and Financial Opennessmentioning

confidence: 99%

What drives financial development? A Meta-regression analysis

Doucouliagos

Haan

Sturm

2021

Oxford Economic Papers

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This article offers a meta-regression analysis of the literature on the drivers of financial development (FD). Our results based on 1,900 estimates suggest that institutional quality is positively correlated to both private sector credit and stock market capitalization (both as share of Gross Domestic Product). Domestic financial openness has a positive effect on both proxies for FD, while trade openness seems only important for stock market capitalization. Inflation has an adverse effect on FD, which is larger for stock market capitalization. Finally, we conclude that the literature has not yet robustly established that remittances matter for FD.

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Remittances and financial development in Latin America and the Caribbean countries: A dynamic approach

Cited by 39 publications

References 39 publications

Empirical relationship between workers' remittances and financial development (an ARDL cointegration approach for Sri Lanka)

Empirical relationship between workers' remittances and financial development (an ARDL cointegration approach for Sri Lanka)

Impacts of remittances on financial development

What drives financial development? A Meta-regression analysis

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