International Migrant Remittances And Financial Sector Development: Evidence From West African Monetary Zone (WAMZ)

Abstract

In this study, we examined the effect of international migrant remittances on financial sector development with a panel of 6 countries in West Africa Monetary Zone (WAMZ). The novelty provided by our study is that we examined the effect of migrant remittances not only on the depth of the financial sectors but also on the efficiency and stability of the financial sector development which many studies failed to cover. We employed one-step differenced-Generalized Method Moments on a panel data of 6 countries and 21 observations (1996-2016) from each country. Our findings showed that international migrant remittances positively contribute to financial sector development in WAMZ. The result of robustness test indicates that the effect of remittances on the depth of the financial sector depends on the type of proxy variable used. We, therefore, recommended that effort should be made by the government to promote inflow of migrant remittances into the WAMZ sub-region.

Remittances, financial development and the effectiveness of monetary policy transmission mechanism in Nigeria: a DSGE approach (1986–2018)

“…Results showed that remittances have positive effects on economic growth both in the short-run and long-run periods. Ugwuegbe et al, (2018) studied the effect of migrant remittances on the depth, efficiency and stability of the financial sector development in the West African Monetary Zone between 1996 and 2016 using one-step generalised method of moment for a panel of six countries. Results revealed that while a positive relationship existed between migrant remittances and financial sector development, on one hand, the effect of remittances on depth, efficiency and stability, on the other hand, varies depending on the choice of the variable used.…”

Uluslararası İşçi Dövizlerinin Finansal Gelişme Üzerindeki Etkisi: 1974-2019 Dönemi Türkiye Deneyimi

“…Also, when remittances are used for consumption expenditures, they affect financial development adversely. Ugwuegbe et al (2018) found that remittances increase financial development in the West African Monetary Zone (WAMZ). On the other hand, while remittances positively affect financial deepening, the impact on financial sector productivity is statistically insignificant.…”