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Is the Relationship between Remittances and Economic Growth Influenced by the Governance and Development of the Financial Sector? New Evidence from the Developing Countries

Author

Listed:
  • Adnan KHURSHID

    (School of Economics and Management, Zhejiang Normal University, Jinhua, Zhejiang. North China University of Technology, Beijing, China. Corresponding author.)

  • Yin KEDONG

    (College of Economics, Department of Finance, Ocean University of China)

  • Adrian Cantemir CALIN

    (Institute for Economic Forecasting, Romanian Academy. Bucharest University of Economic Studies.)

  • Cristina Georgiana ZELDEA

    (Institute for World Economy, Romanian Academy. Bucharest University of Economic Studies.)

  • Sun QIANG

    (North China University of Technology, Beijing, China.)

  • Duan WENQI

    (School of Economics and Management, Zhejiang Normal University, Jinhua, Zhejiang.)

Abstract

We examine the remittances-growth relationship and its interaction with governance and financial development using the System GMM along with the bootstrap panel Granger causality approach. The analysis covers 58 countries divided into low, lower-middle and middle-income economies. The results reveal that remittances and their interaction with financial development have a positive effect on economic growth within all income groups. However, the interaction between remittances and governance is mainly supporting growth in middle-income countries. The bootstrap panel Granger causality approach finds deeper evidence of causality running from remittances to growth in the low and lower-middle-income groups, but weak evidence is provided for the middle-income countries. We find the causality relationships to be idiosyncratic as their sign and direction vary within the groups

Suggested Citation

  • Adnan KHURSHID & Yin KEDONG & Adrian Cantemir CALIN & Cristina Georgiana ZELDEA & Sun QIANG & Duan WENQI, 2020. "Is the Relationship between Remittances and Economic Growth Influenced by the Governance and Development of the Financial Sector? New Evidence from the Developing Countries," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 37-56, March.
    • Handle: RePEc:rjr:romjef:v::y:2020:i:1:p:37-56
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    References listed on IDEAS

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    1. Vargas-Silva, Carlos & Jha, Shikha & Sugiyarto, Guntur, 2009. "Remittances in Asia: Implications for the Fight against Poverty and the Pursuit of Economic Growth," ADB Economics Working Paper Series 182, Asian Development Bank.
    2. Juthathip Jongwanich, 2007. "Workers’ Remittances, Economic Growth and Poverty in Developing Asia and the Pacific Countries," MPDD Working Paper Series WP/07/01, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
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    Cited by:

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    More about this item

    Keywords

    worker’s remittances; financial development; financial institutions; governance; economic growth; bootstrap panel causality test;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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