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The Mediating Role Of Institutions In The Remittance–Growth Relationship: Evidence From Nigeria

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  • Ibrahim Ayoade Adekunle
  • Tolulope Oyakhilome Williams
  • Olatunde Julius Omokanmi
  • Serifat Olukorede Onayemi

Abstract

This study examines the mediating role of institutions in the remit-tance–growth relationship in Nigeria. We use autoregressive distributed lag (ARDL) estimation to establish the interaction of the variables of interest. The short-run re-sults reveal that remittance inflows posi-tively influence growth, probably due to the immediate injection of financial resources that an increase in remittances brings about. This effect is reinforced by improve-ments in regulatory quality. In contrast the long-run results reveal that, over time, re-mittance inflows are negatively related to growth probably due to adverse macroeco-nomic consequences, to a decrease in work incentives, and a decline in the motivation for technological innovation. However, the adoption of improved institutional en-vironment is found to offset the negative long-run effect of remittances on growth, at least to some extent. Therefore, remittance-receiving countries should improve the de-sign and enforcement of laws, regulatory quality, and control over corruption, so that they can make best use of remittance inflows and other sources of external fi-nancing needed to augment domestic pro-ductivity and growth.

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  • Ibrahim Ayoade Adekunle & Tolulope Oyakhilome Williams & Olatunde Julius Omokanmi & Serifat Olukorede Onayemi, 2020. "The Mediating Role Of Institutions In The Remittance–Growth Relationship: Evidence From Nigeria," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(227), pages 7-30, October –.
    • Handle: RePEc:beo:journl:v:65:y:2020:i:227:p:7-30
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    2. Ibrahim Ayoade Adekunle & Sheriffdeen Adewale Tella & Oluwaseyi Adedayo Adelowokan, 2021. "Macroeconomic policy volatility and household consumption in Africa," SN Business & Economics, Springer, vol. 1(3), pages 1-22, March.
    3. Ibrahim A. Adekunle, 2020. "On the search for environmental sustainability in Africa: the role of governance," Working Papers of the African Governance and Development Institute. 20/078, African Governance and Development Institute..
    4. Ibrahim A. Adekunle, 2020. "On the search for environmental sustainability in Africa: the role of governance," Working Papers 20/078, European Xtramile Centre of African Studies (EXCAS).
    5. Odhiambo, Nicholas M., 2022. "Information technology, income inequality and economic growth in sub-Saharan African countries," Telecommunications Policy, Elsevier, vol. 46(6).
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    More about this item

    Keywords

    economic growth; remit-tances; institutions; ARDL; Nigeria;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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