Impact of Workers' Remittances on Financial Development in Nigeria.
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Date
2011-10
Authors
Oke, B.O
Journal Title
Journal ISSN
Volume Title
Publisher
Canadian Center of Science and Education.
Abstract
In this study we examine the nexus between remittances and financial development (FINDEV) in Nigeria from 1977 to 2009. Towards achieving the objective of this study, we employ both the ordinary least square estimation (OLSE) technique and the Generalized Method of Moments (GMM) estimator. Moreover, key diagnostic tests are carried out in order to ascertain model adequacy. We also use two indicators of FINDEV, namely: the ratio of money supply to GDP (m2/gdp) and the ratio of private credit to GDP (cps/gdp). The results generally indicate that remittances positively and significantly influence financial development in Nigeria, with the exception of the
cps/gdp measure of FINDEV in the GMM estimation where the coefficient is insignificant. This implies that remittances augment liquid liabilities more than loanable funds in Nigeria, as remittances are likely used more for consumption purposes than for productive ventures in the country. Since remittances provide foreign exchange that
is vital to both the internal and the external sectors of the economy, they should be encouraged via appropriate policy formulation and implementation. Financial intermediaries and institutions operating in Nigerian should also intensify the mobilization of remittances with the aim of making them important sources of loanable funds in the country.
Description
Staff Publication
Keywords
Financial Development , Loanable Funds
Citation
Oke,B.O. (2011) Impact of Workers' Remittances on Financial Development in Nigeria. International Business Research. Vol. 4, (4), p. 218 - 225.