Harnessing international remittances for financial development: the role of monetery policy

Issahaku, Haruna

doi:10.4314/gjds.v16i2.6

Cited by 6 publications

(4 citation statements)

References 40 publications

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“…Therefore, following this logic, collateral may be undervalued or overvalued. In the case of manufacturing SMEs in regions such as Africa, which is known to have information asymmetries (Duarte et al, 2017;WBES, 2011) and less developed or dysfunctional credit systems (Issahaku, 2019;Sacerdoti, 2005), access to finance can be a major challenge that requires policy-driven solutions. Thus, differences in institutional arrangements and financial markets between developed and developing countries mean that more research on credit access issues is required.…”

Section: Collateral Collateral Security and Credit Accessmentioning

confidence: 99%

“…Africa's financial markets are characterised by vast institutional voids, uncoordinated domestic policies and widespread application of derivative accounting practices. Studies suggest that in these markets, the survival and growth prospects of many SMEs are seriously compromised (Beck et al, 2011;Issahaku, 2019;Santos et al, 2021). Hence, for manufacturing SMEs, the availability of financial resources can be dangerously low (Bigsten et al, 2003;Calabresse et al, 2021;Wellalage & Locke, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Deconstructing involuntary financial exclusion: a focus on African SMEs

et al. 2023

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Small and medium-sized enterprises (SMEs) struggle to obtain credit when credit ratings and collateral are used as criteria to assess their credit applications. In the context of Africa, the financial markets have gaping institutional voids, and contextual insights into SMEs’ experiences remain underdeveloped. Drawing on the stakeholder-agency theory of debt financing, this paper advances the scholarly conversation by theorising about how collateral security, collateral security value and the gender of SME owners lead to the involuntary financial exclusion of many manufacturing businesses in Africa. Analysis of the World Bank Enterprise Survey (WBES) dataset reveals that collateral security and collateral security value, together with gender biases in Africa’s financial markets, reduce credit access potential. Consequently, SMEs’ perceptions of the likelihood of obtaining credit for business purposes are reduced. Empirical results for 13,783 SMEs across 41 African countries indicate that the motivations to apply for credit also diminish. These observations contribute to entrepreneurial financing and SME research.

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Section: Collateral Collateral Security and Credit Accessmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Deconstructing involuntary financial exclusion: a focus on African SMEs

et al. 2023

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“…Further, this study finds that there is bidirectional causality between workers' remittances and FD in the sample countries. Issahaku (2019) investigates how workers' remittances affect FD in some selected developing countries over the period of 2008-2012 by using the GMM technique. The results of this study show that workers' remittances stimulate FD in such countries.…”

Section: Empirical Literaturementioning

confidence: 99%

Empirical relationship between workers' remittances and financial development (an ARDL cointegration approach for Sri Lanka)

Aslam¹,

Sivarajasingham

2020

IJSE

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PurposeThe purpose of this study aims to investigate the nature of the relationship between workers' remittances and financial development (FD) in Sri Lanka for the period from 1975 to 2017.Design/methodology/approachThis study used both the exploratory data analysis and inferential data analysis (IDA) techniques to test the objective of this study. The IDA technique consisted of the augmented Dickey–Fuller (ADF) and Phillips–Perron unit root tests, the autoregressive distributed lag (ARDL) bounds cointegration technique, the Granger causality test and impulse response function analysis.FindingsThe unit root test results show that the variables are in mixed order. The empirical results of cointegration confirm that workers' remittances have a beneficial long-run relationship with FD in Sri Lanka. The Granger causality test result indicates that there is a bidirectional relationship between workers' remittances and FD. The impulse response analysis indicates that a positive shock to workers' remittance has an immediate significant positive impact on the FD of up to 10 years.Practical implicationsThe analytical techniques used in this study explain how workers' remittances induce FD in Sri Lanka.Originality/valueThis study fills an important gap in the academic literature by using newly developed ARDL bounds cointegration techniques in Sri Lanka, by using impulse response function analysis, and by studying the dynamic relationship between workers' remittances and FD using time series data.

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“…Literature contends that adverse financial conditions in countries of origin may lead migrants to remit funds to assist their families in compensating for their lack of access to financial markets and institutions (Giuliano & Ruiz-Arranz 2009;Issahaku 2019). This form of assistance implies that remittances may play a substitution role for the financial intermediation role.…”

Section: Introductionmentioning

confidence: 99%

Regional Financial Integration

Ndlovu

2024

Diasporean 1 Southern African Perspectives

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The chapter investigates the effect of regional financial integration on financial development and its interaction with Diaspora remittance inflows in the Southern African Development Community (SADC) region from 2006 to 2018. The study employed de jure and de facto indicators of financial integration, whilst financial development is measured using credit to the private sector as a percentage of GDP. The econometric analysis utilises the Generalized Method of Moments (GMM). Results show that the de facto measure of financial integration has a significant positive impact on financial development, whilst de jure indicators give mixed and insignificant results. However, given that literature shows that de facto indicators are robust compared to de jure indicators, it is concluded that the impact of financial integration on financial development is positive and linear. The authors of this chapter also analyse the interaction between financial sector development and Diaspora remittance flows by employing panel Granger Causality Tests, which show a bi-directional causality between financial sector development and Diaspora remittance flows Nomusa Ndlovu, Forget Mingiri Kapingura & Asrat Tsegaye 6 in the SADC region. These findings suggest that innovations in the financial sector influence Diaspora remittance inflows and vice-versa. Thus, the authors of this chapter recommend that governments of member states in the SADC region formulate and implement policies that enhance financial integration. This action may involve financial institutions opening branches in any country within the region, allowing remitters to remit at lower transaction costs and have implications for economic growth and poverty alleviation.

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Harnessing international remittances for financial development: the role of monetery policy

Cited by 6 publications

References 40 publications

Deconstructing involuntary financial exclusion: a focus on African SMEs

Deconstructing involuntary financial exclusion: a focus on African SMEs

Empirical relationship between workers' remittances and financial development (an ARDL cointegration approach for Sri Lanka)

Regional Financial Integration

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