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A Bounds Testing Analysis of Migrants Remittances and Financial Development in Selected Sub-Sahara African Countries

Taiwo Ajilore and Sylvanus Ikhide ()

The Review of Finance and Banking, 2012, vol. 04, issue 2, 079-096

Abstract: The study investigated the short and long run impact of remittances on financial development, using country-level data on five selected sub-Saharan African countries, which are Cape-Verde, Lesotho, Nigeria, Senegal and Togo. The study utilized the Auto-Regressive Distributed Lag (ARDL) bounds testing approach for testing the existence of co-integration relationships. The study documented the existence of long-run level relationships between remittances and financial development, and documented evidences which show that remittances promote financial development in Cape Verde, Lesotho, Senegal and Togo, but not in Nigeria. The study advocated policies that encourage and facilitate the uninterrupted flow of remittances transfers, adequate institutions, regulatory strengthening and sound macroeconomic policies in the selected countries.

Date: 2012
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Handle: RePEc:rfb:journl:v:04:y:2012:i:2:p:079-096