Financial Openness and Remittances: Evidence from Sub-Saharan Africa

Ekpeno Effiong and Emmanuel E. Asuquo

Working Papers from African Economic Research Consortium

Abstract: Does financial openness matter for remittances? Are the effects of financial openness on remittance dependent on the levels of financial and institutional development? This paper investigates these questions using panel data for 31 sub-Saharan African countries over from 1990 to 2015, and using a dynamic panel system generalized method of moments (GMM) estimation technique. The results show that financial openness, albeit having a declining effect, does not significantly influence the inflow of remittances into the region. In contrast, when conditioned on the levels of financial development and institutional quality, financial openness tends to significantly increase remittances. However, this effect declines with significant improvement in institutional quality and a well-developed financial sector. Thus, financial openness substitutes financial and institutional development in fostering remittances in the region.

Date: 2022
Note: African Economic Research Consortium
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