TITLE:
The Mediating Role of Financial Development in the Remittances and Household Consumption Nexus: Evidence from a Panel of African and Asian Countries
AUTHORS:
Yaya Keho
KEYWORDS:
Remittances, Household Consumption, Financial Development, Developing Countries
JOURNAL NAME:
Theoretical Economics Letters,
Vol.12 No.5,
October
11,
2022
ABSTRACT: This paper examines whether the strength of the relationship between
remittances and household consumption, documented in the empirical literature,
varies with the financial deepening. It uses a nonlinear panel model and the
pooled mean group estimator for a sample of 19 countries over the period 1987
to 2013. The results show that households in financially developed countries
gain significantly from remittances. They also indicate that per capita income
is positively related to household consumption while inflation and urbanization
are negatively related to it. These findings suggest that financial development
should be enhanced not only to favor the inflows of remittances to developing
countries but also to effectively channel remittances to productive activities
and credit opportunities that can significantly improve household consumption.