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The effect of financial development and remittances on economic growth

Author

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  • Naqeeb Ur Rehman
  • Eglantina Hysa
  • Wai Ching Poon

Abstract

The purpose of this study is to examine the effect of financial development and remittances on economic growth across six Western Balkan countries (WBC) using panel data from 2000 to 2017. Previous studies have neglected the effect of financial development and remittances on economic growth with regard to WBC. Based on system GMM analysis, we found that financial development (broad money stock ratio) and remittances shows positive impact on economic growth across WBC. However, the interaction of financial development and remittances provide a significant and negative effect on economic growth. The results imply that remittances together with financial development substitutes the economic growth of WBC. In order to expand the financial system in the WBC, policies targeted to develop the non-deposit financial institutions and using the narrow interest rate margin policy to encourage investment and thus high economic growth.

Suggested Citation

  • Naqeeb Ur Rehman & Eglantina Hysa & Wai Ching Poon, 2021. "The effect of financial development and remittances on economic growth," Cogent Economics & Finance, Taylor & Francis Journals, vol. 9(1), pages 1932060-193, January.
    • Handle: RePEc:taf:oaefxx:v:9:y:2021:i:1:p:1932060
    DOI: 10.1080/23322039.2021.1932060
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    Citations

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    Cited by:

    1. Shigeki Ono & Ichiro Iwasaki, 2022. "The Finance-Growth Nexus in Europe: A Comparative Meta-Analysis of Emerging Markets and Advanced Economies," Eastern European Economics, Taylor & Francis Journals, vol. 60(1), pages 1-49, January.
    2. 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.
    3. Rana Mosharrafa & Mohammad Sahabuddin & Nipa Saha, 2024. "Migrant Workforces, Foreign Remittance, and Economic Growth Nexus in an Emerging Country," Journal of International Migration and Integration, Springer, vol. 25(4), pages 2321-2337, December.
    4. Muhammed Ashiq Villanthenkodath & Mohd Arshad Ansari, 2024. "Nexus Between Indian Economic Growth and Remittance Inflows: A Non-linear ARDL Approach," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(3), pages 473-495, September.
    5. Daniel Badulescu & Darie Gavrilut & Ramona Simut & Simona-Aurelia Bodog & Daniela Zapodeanu & Constantin-Vasile Toca & Alina Badulescu, 2024. "The Relationship between Sustainable Economic Growth, R&D Expenditures and Employment: A Regional Perspective for the North-West Development Region of Romania," Sustainability, MDPI, vol. 16(2), pages 1-18, January.
    6. Ichiro Iwasaki & Shigeki Ono, 2024. "Economic development and the finance–growth nexus: a meta-analytic approach," Applied Economics, Taylor & Francis Journals, vol. 56(57), pages 8021-8038, December.
    7. Duyen Dang Thi Thuy, 2023. "Energy and Agricultural Development in the Red River Delta Provinces, Vietnam," International Journal of Energy Economics and Policy, Econjournals, vol. 13(4), pages 216-224, July.
    8. Eglantina Hysa & Naqeeb Ur Rehman, 2023. "Economic Growth Through Financial Development: Empirical Evidences from New Member States and Western Balkan Countries," Springer Proceedings in Business and Economics, in: Luminita Chivu & Ignacio De Los Ríos Carmenado & Jean Vasile Andrei (ed.), Crisis after the Crisis: Economic Development in the New Normal, chapter 0, pages 49-67, Springer.
    9. Abdul-Malik Abdulai, 2023. "The impact of remittances on economic growth in Ghana: An ARDL bound test approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2243189-224, June.
    10. Ma, Yubo & Wang, Fei, 2023. "Dutch disease via remittances and natural resources: A perspective of global economy," Resources Policy, Elsevier, vol. 80(C).
    11. Abdullah Mohammad Ghazi Al khatib & Bayan Mohamad Alshaib & Ali Mohamad Kanaan, 2023. "The Interaction Between Financial Development and Economic Growth: A Novel Application of Transfer Entropy and Nonlinear Approach in Algeria," SAGE Open, , vol. 13(4), pages 21582440231, December.

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