The Effect of Remittances on Financial Development in Developing Countries: Dynamic Panel Data Analysis

Abstract

The aim of the study is to measure the effect of workers' remittances on financial development. The study on 44 developing countries covers the period 1994-2017. In the empirical analysis of the study, financial development index data was used as the dependent variable. However, financial institutions and financial markets index data, which are the sub-criteria of the index, are also used in the study as dependent variables. As independent variables, workers' remittances, GDP per capita, trade openness and inflation data are used. According to the results of the analysis made using the Two-Stage System Generalized Moments Method, workers' remittances, per capita GDP and trade openness, financial development, financial institutions and financial markets are statistically significant and positive, while inflation is negatively.