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A Bounds Testing Analysis of Migrants Remittances and Financial Development in Selected Sub-Sahara African Countries

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  • Taiwo Ajilore
  • Sylvanus Ikhide

Abstract

The study investigated the short and long run impact of remittances on financial development, using country-level data on five selected sub-Saharan African countries, which are Cape-Verde, Lesotho, Nigeria, Senegal and Togo. The study utilized the Auto-Regressive Distributed Lag (ARDL) bounds testing approach for testing the existence of co-integration relationships. The study documented the existence of long-run level relationships between remittances and financial development, and documented evidences which show that remittances promote financial development in Cape Verde, Lesotho, Senegal and Togo, but not in Nigeria. The study advocated policies that encourage and facilitate the uninterrupted flow of remittances transfers, adequate institutions, regulatory strengthening and sound macroeconomic policies in the selected countries.

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Bibliographic Info

Article provided by Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante in its journal The Review of Finance and Banking.

Volume (Year): 04 (2012)
Issue (Month): 2 (December)
Pages: 079-096

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Handle: RePEc:rfb:journl:v:04:y:2012:i:2:p:079-096

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  1. Pablo Fajnzylber & J. Humberto López, 2008. "Remittances and Development : Lessons from Latin America," World Bank Publications, The World Bank, number 6911, October.
  2. Maurizio Bussolo & María Soledad Martínez Peria & César Calderón & Yira Mascaró & Mette E. Nielsen & Pablo Acosta & J. Humberto López & Çaglar Özden & Yoko Niimi & Luis Molina & Florencia Moiz, . "Remittances and Development: Lessons from Latin America," IDB Publications 59678, Inter-American Development Bank.
  3. Paul M Romer, 1999. "Endogenous Technological Change," Levine's Working Paper Archive 2135, David K. Levine.
  4. Rapoport, Hillel & Docquier, Frederic, 2006. "The Economics of Migrants' Remittances," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  5. Ketkar, Suhas & Ratha, Dilip, 2001. "Development financing during a crisis : securitization of future receivables," Policy Research Working Paper Series 2582, The World Bank.
  6. Woodruff, Christopher & Zenteno, Rene, 2007. "Migration networks and microenterprises in Mexico," Journal of Development Economics, Elsevier, vol. 82(2), pages 509-528, March.
  7. Alejandra Cox Edwards & Manuelita Ureta, 2003. "International Migration, Remittances, and Schooling: Evidence from El Salvador," NBER Working Papers 9766, National Bureau of Economic Research, Inc.
  8. Paresh Kumar Narayan, 2005. "The structure of tourist expenditure in Fiji: evidence from unit root structural break tests," Applied Economics, Taylor & Francis Journals, vol. 37(10), pages 1157-1161.
  9. Pesaran, M.H. & Shin, Y., 1995. "An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis," Cambridge Working Papers in Economics 9514, Faculty of Economics, University of Cambridge.
  10. Sandrine Kablan, 2010. "Banking Efficiency and Financial Development in Sub-Saharan Africa," IMF Working Papers 10/136, International Monetary Fund.
  11. Bollerslev, Tim, 1986. "Generalized autoregressive conditional heteroskedasticity," Journal of Econometrics, Elsevier, vol. 31(3), pages 307-327, April.
  12. Michael Klein & Giovanni Olivei, 1999. "Capital account liberalization, financial depth, and economic growth," Working Papers 99-6, Federal Reserve Bank of Boston.
  13. Subrata Ghatak & Jalal Siddiki, 2001. "The use of the ARDL approach in estimating virtual exchange rates in India," Journal of Applied Statistics, Taylor & Francis Journals, vol. 28(5), pages 573-583.
  14. Edwards, Alejandra Cox & Ureta, Manuelita, 2003. "International migration, remittances, and schooling: evidence from El Salvador," Journal of Development Economics, Elsevier, vol. 72(2), pages 429-461, December.
  15. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
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