Remittance–institutional quality nexus: curse or blessing

Zakaria Lacheheb, Normaz Wana Ismail, N.A.M. Naseem and Ly Slesman

Studies in Economics and Finance, 2021, vol. 39, issue 4, 617-629

Abstract: Purpose - This study aims to examine the linear and nonlinear remittance–institutional quality link in developing countries. Design/methodology/approach - This study investigates the nonlinear relationship between remittance and political institutional quality in a panel of 97 developing countries using annual data of over nine years from 2009 to 2017. The estimated model uses system generalized method of moments for three political institutions indicators, namely, democracy, political stability and civil liberties. Findings - The results revealed that remittance has a significant inverted U-shape impact on political institution’s indicators. Therefore, before the turning point, remittance is associated with high level of democracy, more stable political system and more civil freedom. While moving after the turning point indicates low level of political institution in the country. Originality/value - The authors certify that this is the original paper. It has not been previously published and is not currently under submission or in press elsewhere.

Keywords: Remittance; SGMM; Dynamic panel threshold; Hierarchy of institutional hypothesis; Political institution; E02; F24; F22; P48 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:sefpps:sef-09-2020-0364

DOI: 10.1108/SEF-09-2020-0364

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