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Dynamics of the remittances: Fnancial development nexus in Sub Saharan Africa (SSA)

Author

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  • Strike Mbulawa

    (Head of Department, Accounting & Finance, Faculty of Business & Accounting, Botho University, Botho Education Park, Kgale, Gaborone, Botswana)

  • Samuel Chingoiro

    (Faculty of Business & Accounting, Botho University, Botho Education Park, Kgale, Gaborone, Botswana)

  • Robert Machera

    (Faculty of Business & Accounting, Botho University, Botho Education Park, Kgale, Gaborone, Botswana)

Abstract

This paper explores the inter-connectedness of remittances and financial development and how their associated covariates such as savings, investment, money supply and economic growth are impacted by this relationship. The study employs a panel vector autoregression (P-VAR) estimation technique, and the generalized methods of moments (GMM) are applied after removing fixed effects and lagged regressors are used as instruments to have consistent estimators. The main findings of the study demonstrate that (i) remittances and financial development have a feedback interrelationship, and some interlinkages are identified amongst their covariates, (ii) economic growth has a dual connection with financial development and that (iii) savings, investment, and broad money supply influence both financial development and remittances. These findings contribute to current discussions in the literature as they support the importance of deepening financial markets in SSA, and attracting more remittances. The significant role played by the diaspora in improving domestic financial depth is confirmed. Progression in SSA economic growth helps to stimulate those in the diaspora to repatriate most of their earnings back home. Key Words:Remittances, Financial Development, Sub Saharan Africa, Panel Vector autoregression

Suggested Citation

  • Strike Mbulawa & Samuel Chingoiro & Robert Machera, 2022. "Dynamics of the remittances: Fnancial development nexus in Sub Saharan Africa (SSA)," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(4), pages 171-182, June.
    • Handle: RePEc:rbs:ijbrss:v:11:y:2022:i:4:p:171-182
    DOI: 10.20525/ijrbs.v11i4.1757
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    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 –.

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