Abstract
AbstractWe examine the relationship between financial development and remittance inflows (remittances), measured as a share of GDP, within a non‐linear framework in Jamaica over the period 1980 to 2017. By applying the autoregressive distributed lag bound testing approach to cointegration, we arrive at two key results. First, there is a long‐run cointegrating relationship running from remittances to financial development. Second, remittances and financial development are non‐linearly related. Financial development is a U‐shaped function of remittances. As remittances increase, they first have a negative impact on financial development. However, after remittances reach a threshold point, their impact on financial development is positive. Taken together, the results indicate that remittances first substitute for and then complement financial development. We provide important policy suggestions such as those that would increase remittances and those that would incentivize remittance receiving households to use these inflows in the formal financial sector.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.