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Do Workers¡¯ Remittances Promote Financial Development in Sub-Sahara Africa Countries?

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  • Taiwo V. Ojapinwa
  • Oladipo T. Bashorun

Abstract

This study examines the impact of workers¡¯ remittances on financial development in 32 Sub-Sahara Africa countries. In this paper we employ dynamic panel GMM model to study the potential effect of remittances on financial development with emphasis on financial intermediation. While the study depends on credit to private sector as a measure of financial development, past level of financial development, inflation, globalisation, FDI, size of government economic growth and worker remittances were controlled for. Employing data from 1996 -2010, the study discovers that workers¡¯ remittances affect financial development in a positive and significant way. This positive relationship suggests that remittances complements financial intermediation in SSA countries as exemplified by "endogenous growth" literature and the canonical intermediating model with the insights that remittances savings behaviour will generally influence equilibrium financial growth rates.

Suggested Citation

  • Taiwo V. Ojapinwa & Oladipo T. Bashorun, 2014. "Do Workers¡¯ Remittances Promote Financial Development in Sub-Sahara Africa Countries?," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(2), pages 151-159, April.
    • Handle: RePEc:jfr:ijfr11:v:5:y:2014:i:2:p:151-159
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    References listed on IDEAS

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    1. Valerie R. Bencivenga & Bruce D. Smith, 1991. "Financial Intermediation and Endogenous Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 195-209.
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    Cited by:

    1. T. V. Ojapinwa & N. I. Nwokoma, 2018. "Workers’ Remittances and the Dutch‐Disease Argument: Investigating the Relationship in Sub‐Saharan Africa," African Development Review, African Development Bank, vol. 30(3), pages 316-324, September.
    2. S. Bolarinwa, Thompson & O. Akinbobola, Temidayo, 2021. "Remittances-Financial Development Nexus: Causal Evidence From Four African Countries," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 8(1), pages 1-17, June.
    3. Kassey P. Garba & Wasiu Adekunle & Oluwatosin Adeniyi, 2020. "Nexus between Foreign Remittances and Economic Growth in Nigeria: Role of the Financial Sector," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 7(1), pages 15-24.
    4. Inoue, Takeshi, 2018. "Financial development, remittances, and poverty reduction: Empirical evidence from a macroeconomic viewpoint," Journal of Economics and Business, Elsevier, vol. 96(C), pages 59-68.
    5. Roseline Nyakerario Misati & Anne Kamau & Hared Nassir, 2019. "Do migrant remittances matter for financial development in Kenya?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-25, December.

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