Financial inclusion and migrant remittances in Sub-Saharan Africa: a panel VAR approach

Abstract

PurposeThis study examines the causal and dynamic link between financial inclusion and migrant remittances in sub-Saharan Africa.Design/methodology/approachThe study employed a panel vector autoregressive (VAR) framework to examine the dynamic relationship between financial inclusion and migrant remittances in sub-Saharan Africa.FindingsThe findings indicate that there is a reverse causality between financial inclusion and migrant remittances in sub-Saharan Africa.Practical implicationsThe practical implications of these findings are that central governments and economic policymakers in sub-Saharan African countries should formulate and implement policies aimed at fostering financial inclusion if they are to attract more migrant remittances to promote economic growth and financial sector development. This suggests that these two variables are complementary and not contradictory. The results also suggest that central banks and other financial institutions can leverage the positive effect of financial inclusion of financial sector development to enhance the development of the financial sector instead of pursuing financial sector development as a policy objective. This means policies aimed at promoting financial inclusion will not impede or sacrifice migrant remittances, economic growth and financial sector development.Originality/valueThis paper is the first to construct a financial inclusion index to examine the link between financial inclusion and migrant remittances from the sub-Saharan Africa perspectivePeer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-10-2019-0612/