The remittance‐growth nexus in leading remittance‐earning nations, controlling regulatory quality, trade openness, energy use, and financial expansion

Abstract

AbstractMany emerging countries rely on incoming remittances to finance their economic growth, as remittance inflow has a variety of positive knock‐on effects. This study looks at the “remittance‐growth nexus” among the top 20 nations that earn remittances, considering regulatory quality, trade openness, energy consumption, and financial development as controlling variables. It makes use of panel data covering the years 1996–2021, the “Common Correlated Effects Mean Group (CCEMG)” and “Augmented Mean Group” estimation techniques, and the “Dumitrescu‐Hurlin (D‐H)” causality assessment. The primary estimation findings demonstrate a unique outcome that incoming remittance hurts economic growth (EG). However, EG benefits from trade openness, energy use, financial expansion, and regulatory quality, which have a beneficial impact on EG. The D‐H causality assessment results support the primary estimation findings and also reveal that despite both regulatory quality's and financial expansion's influence on EG, they don't cause remittances, rather remittance inflow causes them. The findings have significant policy ramifications for inbound remittance to be routed to saving and investment, guaranteeing reliable energy availability, enhancing trade openness, a prudential banking system, and improving regulatory quality to affect EG positively.