The long-run and short-run impacts of remittances on financial development in developing countries

Fromentin, Vincent

doi:10.1016/j.qref.2017.02.006

Cited by 78 publications

(51 citation statements)

References 41 publications

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“…We find that remittances have a positive and statistically significant impact on private sector credit in less developed countries; however, the impact is higher for PICs relative to other countries in the sample. The positive impact of remittances on credit is consistent with findings of, for example, Fromentin (2017) and Aggarwal et al (2006). Further robustness test confirms that the results are consistent with our initial findings.…”

Section: Introductionsupporting

confidence: 90%

“…In terms of the control factors, first, this study uses the real GDP per capita as a measure of the level of economic development. A number of studies have argued that the level of a country's development contributes positively to its private sector credit (Shan, Morris, and Sun, 2001;Brown et al, 2013;Fromentin, 2017;Sharma and Syarifuddin, 2019). Economies with a higher GDP per capita are believed to have better economies of scale in organizing and supporting financial institutions.…”

Section: Empirical Methodology and Data A Empirical Methodologymentioning

confidence: 99%

“…In another similar study, Aggarwal, Demirguc-Kunt, and Martinez Peria (2006) use data from 99 developing countries and find remittances to have a positive and significant effect on the ratios of bank deposits to the gross domestic product (GDP) and of credit to the GDP, the latter relation being less robust. Fromentin (2017) finds that remittances have a positive influence on credit and notes that, in the long run, the influence is greater in the case of low-income countries relative to upper-middle-income countries. The positive effect also holds in the short run, except for low-income countries.…”

Section: Introductionmentioning

confidence: 99%

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Impact of Remittances on Private Sector Credit in the Pacific Island Countries

Chen

Chand²,

Singh³

2020

BEMP

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We examine the effect of remittances on private sector credit in the Pacific Islandcountries (PICs) using the data from 58 developing countries from 2004 to 2016. Theanalysis provides strong evidence that the effect of remittance inflows on privatesector credit for PICs is positive and higher than that for other developing countries.In addition, the per capita gross domestic product, official development assistance,the number of bank branches, and institutional quality are also positively associatedwith private sector credit in PICs, while the Consumer Price Index is negativelyassociated with private sector credit. These results have important implications for thedevelopment of financial sector in PICs.

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Section: Introductionsupporting

confidence: 90%

Section: Empirical Methodology and Data A Empirical Methodologymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Impact of Remittances on Private Sector Credit in the Pacific Island Countries

Chen

Chand²,

Singh³

2020

BEMP

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“…Based on liabilities as a proxy for financial sector development, remittances positively influence financial development only in four countries (Niger, Senegal, Sierra Leone, and Sudan) and financial development positively impacts remittances only in Gambia. Fromentin () analyzes the dynamic impact of remittances on financial development for emerging and developing countries over the period 1974 to 2014 employing a Pooled Mean Group (PMG) approach. With three panels differentiated by level of income, the results show that a positive long‐run relationship between remittances and financial development coexists with a significant (and slightly positive) short‐run relationship, except for low‐income countries.…”

Section: Review Of the Related Literaturementioning

confidence: 99%

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

Fromentin

2018

Review Development Economics

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Despite the importance of remittances in total international flows, the conclusion of the studies on the relationship between remittances and financial development, is still not completely unanimous, particularly in Latin America and the Caribbean. However, financial development matters for growth and poverty alleviation and financial inclusion have many beneficial effects for households. We examine the relationship between remittances and financial sector development with several dynamic panel data methods. We find a positive, significant, and robust bidirectional link between remittances and financial development for the panel of 32 countries.

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“…The analysis of the long-term and short-term impact of remittances on financial development in developing countries has demonstrated the existence of a long-term positive and a slightly positive short-term relationship, with the exception of low-income countries [30]. For Bangladesh, using household income and expenditure it was showed that remittance receipts led to a decline of about eighteen percent of poverty [31].…”

Section: Methodsmentioning

confidence: 99%

The Effect of Remittances on Poverty in the Emerging Countries of the European Union

2019

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In this paper we study the evolution of remittances and risk of poverty threshold for nine emerging countries in the European Union and analyzed the evolution and trend of the share of remittances in the risk of poverty threshold. The analysis was performed on data taken from the Eurostat database for the period 2005–2017. The statistical analysis of the data showed that the evolution of both remittances and risk of poverty threshold was heavily influenced by the global economic crisis. Although after the crisis, the risk of poverty threshold has seen a growing trend in all emerging countries, the remittances have experienced sinuous variations, dramatic declines for some of the countries (drastically for Romania and Latvia) and significant increases for others (Hungary). The results of the analysis using time-dependent regression models lead to the conclusion that, although the share of remittances in risk of poverty threshold diminished abruptly after the 2009 economic crisis, in the short term it is expected to maintain a growth trend for most of the analyzed countries (Bulgaria, Czechia, Hungary, Lithuania, Poland, Romania, and Slovakia), followed downward tendency after 2018 for Bulgaria and Romania, and after 2020 for Hungary and Lithuania. For Latvia and Estonia, both quadratic and cubic models estimate a decreasing evolution.

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The long-run and short-run impacts of remittances on financial development in developing countries

Cited by 78 publications

References 41 publications

Impact of Remittances on Private Sector Credit in the Pacific Island Countries

Impact of Remittances on Private Sector Credit in the Pacific Island Countries

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

The Effect of Remittances on Poverty in the Emerging Countries of the European Union

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