Remittances and financial development for selected countries in Sub-Saharan Africa

Strauss, Marquin (2014-12)

Thesis (MDF)--Stellenbosch University, 2014.


ENGLISH ABSTRACT: Immigrant remittances have received increasing attention over the last couple of decades, due to the substantial financial inflows into developing countries, as their size and impact on the economies have experienced significant growth over a period of time. This study has investigated the relationship between financial development, specifically for the banking sector, and remittances for eight Sub-Saharan African (SSA) countries by utilising panel estimation techniques from 1993-2011. In this particular study, the investigation was focused on the association between remittances and the aggregate level of bank deposits (M2) and domestic credit to the private sector that represented financial development. For M2, the results showed that remittances are negatively correlated with money supply and it was not statistically significant for this equation. However, in terms of domestic credit to the private sector, a positive and significant determinant was found for remittances and financial development in these eight Sub-Saharan countries. It is recommended that policymakers should develop and implement sustainable policies to facilitate uninterrupted flow of remittances, strengthen financial institutions and sound macro-economic policies in order to attract more remittances through the banking sector.

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