Remittances, Financial Depth and Economic Growth of Malaysia

Abstract

The objective of this study is to investigate the effects of remittances inflows to Malaysia's economy and does the financial sector development level have influence on remittances impact to economic growth of Malaysia. Time series technique has been adopted to explore long run effect of remittances, financial depth and growth in Malaysia using annual data for the period 1984-2013. The results showed that remittances and financial depth have positive and significant effect on growth in long run. Granger Causality tests are also used to explore the relationship between remittance-growth and financial development-growth. The findings revealed that there is an impact of remittances on economic growth of Malaysia via the influence of the country's financial depth.