Remittances, financial development, and economic growth in African countries

Eric Fina kamani (), Amadé Nacanabo (), Olivier Beguy (), Ibrahima Diouf () and Gervasio Semedo ()
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Eric Fina kamani: University of Tours - LEO - LéP
Amadé Nacanabo: Virtual University of Burkina Faso - LéP
Olivier Beguy: African Development Bank Group (AFDB)
Ibrahima Diouf: University of Poitiers - LéP - CIMP
Gervasio Semedo: University of Tours - LEO

Economics Bulletin, 2025, vol. 45, issue 1, 243 - 262

Abstract: This study examines the impact of remittances on economic growth in African countries, with a particular focus on the role of financial development. Unlike previous research, it adopts a two-step approach: first, it identifies the key growth determinants using Bayesian inference techniques; second, it estimates panel smooth transition regression (PSTR) models, incorporating these determinants as controls. The results indicate that remittances alone do not have a significant impact on economic growth. However, their positive effects are amplified in the presence of a well-functioning financial system. The study recommends that African policymakers prioritize financial sector reforms to fully harness the growth-enhancing potential of remittances.

Keywords: Remittances; Economic growth; Financial development (search for similar items in EconPapers)
JEL-codes: F2 O4 (search for similar items in EconPapers)
Date: 2025-03-30
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