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Financial liberalization, remittances and economic growth in Nigeria (1990–2018)

Author

Listed:
  • Bosede Victoria Kudaisi
  • Titus Ayobami Ojeyinka
  • Tolulope Temilola Osinubi

Abstract

Purpose - International remittances are an important segment of external financial flows in Nigeria, currently superseding official development aid (ODA) in terms of volume, and foreign direct investment (FDI) in terms of stability. This study is motivated by the recent increase in remittance flows in Nigeria as the highest recipient in West Africa, and the fact that the growth impact of remittances is weak within the country. The financial liberalization index developed by Chinn and Ito (2006) is employed in this study to examine the role of financial liberalization in the remittances-growth nexus in Nigeria over the period 1990–2018. Design/methodology/approach - To address the possibility of endogeneity among the variables in the model, the study employs the generalized method of moments (GMM) as a technique of analysis. Findings - Remittances and financial liberalization are found to have negative significant impacts on economic growth. However, the effect of the interaction term of financial liberalization and remittances on economic growth is positive and significant. This suggests that the two variables act as complements in the enhancement of economic growth in Nigeria. The study thus concludes that financial liberalization is a strong transmission channel through which remittance inflows positively affect economic growth in Nigeria. The study also advocates for a well-developed financial sector in order to attract more growth-enhancing remittances into the country. Research limitations/implications - The implication of the research findings is that an unrestrained financial sector is necessary to encourage and optimize the benefits of remittance flows on economic growth in Nigeria. Originality/value - Previous studies have considered the effects of financial development on the remittances-growth nexus in Nigeria. However, this study examines the role of financial liberalization in the nexus between remittances and economic growth in Nigeria by using the Chinn and Ito (2008) index of financial openness.

Suggested Citation

  • Bosede Victoria Kudaisi & Titus Ayobami Ojeyinka & Tolulope Temilola Osinubi, 2021. "Financial liberalization, remittances and economic growth in Nigeria (1990–2018)," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 38(4), pages 562-580, March.
    • Handle: RePEc:eme:jeaspp:jeas-09-2020-0164
    DOI: 10.1108/JEAS-09-2020-0164
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    Citations

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    Cited by:

    1. Mathew Ekundayo Rotimi & Mishelle Doorasamy & Udi Joshua & Grace Gift Rotimi & Confort Omolayo Rotimi & Gabriel Samuel & Gbenga Adeyemi & Ayodele Solomon Alemayo & Alfred Kimea, 2022. "ARDL Analysis of Remittance and Per Capita Growth Nexus in Oil Dependent Economy: The Nigeria’s Experience," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 15(3), pages 38-51, December.
    2. James Temitope Dada & Taiwo Akinlo, 2023. "Remittances-Finance-Growth Trilogy: Do Remittance And Financial Development Complement Or Substitute Each Other To Affect Growth In Nigeria?," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 68(236), pages 105-138, January –.

    More about this item

    Keywords

    Financial liberalization; Remittances; Economic growth; Nigeria; GMM; G2; O40;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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