The study investigates the potential non-linear and asymmetric impact of remittances and
bank-based financial development on economic growth and also the potential mediating role
of bank-based financial development in the remittance-growth nexus. The study used the
newly developed Non-linear Autoregressive Distributed Lag (NARDL) model by Shin et al.
(2014) on annual data for Ghana from 1979 to 2017 for the analysis.
The study finds that remittances have a non-linear and asymmetric impact on growth in both
the long and short run when the banking system is generally developed and specifically when
it is accessible and efficient. The study also finds bank-based financial development to have
a non-linear but symmetric impact on growth in both the long and short run. Again, the study
finds evidence for the credit constraint hypothesis which posits that when the financial
system is less developed or economic agents are unable to access credit, then recipients of
remittances could rely on the amounts received to start or finance their businesses.
It is recommended that policies geared towards sustained cumulative increases in remittance
flows to Ghana should be promulgated and implemented. And policies to make remittance
recipients come into contact with banks as well as incentives to make the remittances
received through banks stay long enough to be channeled into productive investments should
be initiated and implemented.
Key Words: Non-linear, Asymmetric, Remittances, Bank-based financial development, Economic
growth, Non-linear Autoregressive Distributed Lag (NARDL), Ghana, Credit Constraint hypothesis.
Edu, F (2021). Remittances, Bank-Based Financial Development And Economic Growth: Empirical Evidence From Ghana. Afribary.com: Retrieved April 17, 2021, from https://afribary.com/works/remittances-bank-based-financial-development-and-economic-growth-empirical-evidence-from-ghana
Frontiers, Edu. "Remittances, Bank-Based Financial Development And Economic Growth: Empirical Evidence From Ghana" Afribary.com. Afribary.com, 04 Apr. 2021, https://afribary.com/works/remittances-bank-based-financial-development-and-economic-growth-empirical-evidence-from-ghana . Accessed 17 Apr. 2021.
Frontiers, Edu. "Remittances, Bank-Based Financial Development And Economic Growth: Empirical Evidence From Ghana". Afribary.com, Afribary.com, 04 Apr. 2021. Web. 17 Apr. 2021. < https://afribary.com/works/remittances-bank-based-financial-development-and-economic-growth-empirical-evidence-from-ghana >.
Frontiers, Edu. "Remittances, Bank-Based Financial Development And Economic Growth: Empirical Evidence From Ghana" Afribary.com (2021). Accessed April 17, 2021. https://afribary.com/works/remittances-bank-based-financial-development-and-economic-growth-empirical-evidence-from-ghana