The effect of financial development and remittances on economic growth

The purpose of this study is to examine the effect of financial development and remittances on economic growth across six Western Balkan countries (WBC) using panel data from 2000 to 2017. Previous studies have neglected the effect of financial development and remittances on economic growth with reg...

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Bibliographic Details
Published inCogent economics & finance Vol. 9; no. 1; pp. 1 - 15
Main Author Hysa, Eglantina
Format Journal Article
LanguageEnglish
Published Abingdon Taylor & Francis 2021
Cogent
Taylor & Francis Ltd
Taylor & Francis Group
Subjects
Economic growth
financial development
Financial institutions
Financial systems
Interest rates
Money
Panel data
Remittances
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Summary:The purpose of this study is to examine the effect of financial development and remittances on economic growth across six Western Balkan countries (WBC) using panel data from 2000 to 2017. Previous studies have neglected the effect of financial development and remittances on economic growth with regard to WBC. Based on system GMM analysis, we found that financial development (broad money stock ratio) and remittances shows positive impact on economic growth across WBC. However, the interaction of financial development and remittances provide a significant and negative effect on economic growth. The results imply that remittances together with financial development substitutes the economic growth of WBC. In order to expand the financial system in the WBC, policies targeted to develop the non-deposit financial institutions and using the narrow interest rate margin policy to encourage investment and thus high economic growth.
ISSN:2332-2039
2332-2039
DOI:10.1080/23322039.2021.1932060