Title:
Role of Financial Development on Remittance-Investment Nexus in Nigeria: An Interactive Effect Approach

Authors:
Okeke, Izuchukwu Chetachukwu, Chinanuife, Emmanuel, Nigeria

Abstract:

Financial constraint has been identified as one of the main impediments that keep the poor from getting foothold on the development ladder. Financial development, measured by the amount of credit granted to the private sector by the bank sector helps in bridging the gap between the rich and the poor. The paper investigates the role of financial development on remittance-investment nexus in Nigeria. Annual secondary data covering the periods of 1981Q1 to 2020Q4, and were obtained from the World Development Indicators (WDI) published by the World Bank and Statistical Bulletin published by the Central Bank of Nigeria (CBN). Data collected were analyzed using Philips-Perron test unit root test, Augmented Dickey-Fuller unit root test, and Autoregressive Distributed lag model. Results obtained indicate that financial deepening dampens the effect of remittances on private domestic investment. The unit root test carried out revealed that only private domestic investment is integrated of order (0) while international remittances and financial deepening are integrated of order (1). The study recommends that government should implement policies that will encourage the flow of remittances into Nigeria, and adopt the agreement of World Remittance Index that the cost of remitting money in Sub-Saharan Africa should not be more than 5% of the amount.

DOI: http://dx.doi.org/10.51505/IJEBMR.2022.6202