scholarly journals Impact of Foreign Remittances on Financial Development of Pakistan

2020 ◽  
Vol 6 (1) ◽  
pp. 331-342
Author(s):  
Ghulam Mustafa ◽  
Said Zamin Shah ◽  
Asim Iqbal
Keyword(s):  
Developing Countries ◽  
Money Supply ◽  
Financial Development ◽  
Positive Impact ◽  
External Source ◽  
Annual Data ◽  
Distributed Lag ◽  
Long Run ◽  
Auto Regressive ◽  
Data Source

Purpose: Mostly developing countries are not receiving the remittances with same speed as compared to workers’ outflow. This cumbersome situation allows developing countries to go to external source of funding (debt) for economic and financial development-FD. Thus, the purpose of this paper is to investigate the nexus between FD and remittances in Pakistan for the period 1976-2015.   Design/Methodology/Approach: The study utilizes the time series annual data for the period 1976-2015. Data were taken from different sources like world bank data source and different economic surveys of Pakistan.  To evaluate the long run relationships between FD and remittances, Auto Regressive Distributed Lag (ARDL) strategy is utilized. Findings: The empirical results indicate that remittances have a significant positive impact on FD (M2/GDP) except for CPS/GDP measure of FD which has insignificant positive coefficient. Implications/Originality/Value: Most of previous literature measured FD with the ratio of money supply to GDP (M2/GDP) however, the current study measured with two indicators i.e. the ratio of money supply to GDP (M2/GDP) and the ratio of bank credit to GDP (CPS/GDP). This is the main contribution in the literature. The study recommends that remittances channelize financial segment of the country in augmented manner and government should encourage Pakistani expatriates to send the remittance through formal sources (e.g. banks). Financial institutions and intermediaries working in Pakistan should exaggerate the recruitment of remittances with the purpose to make them significant source for loanable funds. In addition to this, the concern department should simplify the procedure for sending remittances.

Financial development and economic growth: empirical evidence from India

2015 ◽  
Vol 32 (3) ◽  
pp. 340-356 ◽  
Author(s):  
Madhu Sehrawat ◽  
A K Giri
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Positive Impact ◽  
Annual Data ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Integration Test ◽  
Short Run ◽  
Sustainable Economic Growth

Purpose – The purpose of this paper is to examine the relationship between financial development and economic growth in India using annual data from 1982 to 2012. Design/methodology/approach – The stationarity properties are checked by ADF, DF-GLS, KPSS and Ng–Perron unit root tests. The long- and short-run dynamics are examined by using the autoregressive distributed lag (ARDL) approach to co-integration. Findings – The co-integration test confirms a long-run relationship in financial development and economic growth for India. The analysis of ARDL test results reveals that both bank-based and market-based indicators of financial development have a positive impact on economic growth in India. Hence, the results support the supply-leading hypothesis and highlight the importance of financial development in economic growth. The findings also indicate that the Indian bank-centric financial sector has the potential for economic growth through credit transmission. Research limitations/implications – The present study recommends appropriate reforms in financial markets to attain sustainable economic growth. The findings are useful for policy-makers who want to maintain a parallel expansion of financial development and growth. Originality/value – To date, there are hardly any studies that use both market-based and bank-based indicators as proxies of financial development and analyze their role in economic growth in India. So, the contribution of the paper is to fill this gap in literature.

scholarly journals The Determinants of Pakistan’s Trade Balance: An ARDL Cointegration Approach

2010 ◽  
Vol 15 (1) ◽  
pp. 1-26 ◽  
Author(s):  
Waliullah Waliullah ◽  
Mehmood Khan Kakar ◽  
Rehmatullah Kakar ◽  
Wakeel Khan
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Money Supply ◽  
Trade Balance ◽  
Exchange Rate Regime ◽  
Annual Data ◽  
Impulse Response Functions ◽  
Bounds Testing ◽  
Distributed Lag ◽  
Long Run

This article is an attempt to examine the short and long-run relationship between the trade balance, income, money supply, and real exchange rate in the case of Pakistan’s economy. Income and money variables are included in the model in order to examine the monetary and absorption approaches to the balance of payments, while the real exchange rate is used to evaluate the conventional approach of elasticities (Marshall Lerner condition). The bounds testing approach to cointegration and error correction models, developed within an autoregressive distributed lag (ARDL) framework is applied to annual data for the period 1970 to 2005 in order to investigate whether a long-run equilibrium relationship exists between the trade balance and its determinants. Additionally, variance decompositions (VDCs) and impulse response functions (IRFs) are used to draw further inferences. The result of the bounds test indicates that there is a stable long-run relationship between the trade balance and income, money supply, and exchange rate variables. The estimated results show that exchange rate depreciation is positively related to the trade balance in the long and short run, consistent with the Marshall Lerner condition. The results provide strong evidence that money supply and income play a strong role in determining the behavior of the trade balance. The exchange rate regime can help improve the trade balance but will have a weaker influence than growth and monetary policy.

Impacts of remittances on financial development

2020 ◽  
Vol 47 (3) ◽  
pp. 467-477
Author(s):  
SeyedSoroosh Azizi
Keyword(s):  
Developing Countries ◽  
Interest Rates ◽  
Financial Development ◽  
Positive Impact ◽  
National Income ◽  
Fixed Effect Model ◽  
Content Type ◽  
International Remittances ◽  
Long Run ◽  
Percent Increase

PurposeThe purpose of this paper is to examine the impacts of international remittances on financial development in developing countries.Design/methodology/approachThe focus is on a panel of 124 developing countries for the period 1990–2015. The empirical evidence is based on the instrumental variable-fixed effect model.FindingsResults obtained in this study indicate that a 10 percent increase in the remittance to GDP ratio leads to 1.7 percent increase in domestic credit to private sector, 1.9 percent increase in bank credit, 1.2 percent increase in bank deposit, and 0.8 percent increase in liquid liabilities. The positive impact of remittances on financial development in developing countries is particularly important because financial development fosters long-run growth and reduces poverty.Originality/valueTo address the endogeneity of remittances, the study estimates bilateral remittances and use them to create weighted gross national income per capita and real interest rates of remittance-sending countries. To the best of the author’s knowledge, this is the first study to assess the endogeneity of remittances in this way.

scholarly journals Macroeconomic Policy and Agricultural Value Chain in Nigeria

2018 ◽  
Vol 2 (2) ◽  
pp. 31-40
Author(s):  
Martins Iyoboyi ◽  
Samuel Felix Okereke ◽  
Latifah Musa-Pedro
Keyword(s):  
Money Supply ◽  
Value Chain ◽  
Agricultural Sector ◽  
Positive Impact ◽  
Government Expenditure ◽  
Macroeconomic Policy ◽  
Policy Framework ◽  
Distributed Lag ◽  
Long Run ◽  
Equilibrium Relationship

The objective of the paper was to investigate macroeconomic policy and agricultural value chain in Nigeria. The period covered is 1981–2016. The analysis is based on the autoregressive distributed lag framework. A long-run equilibrium relationship was found among the variables used in the investigation. Government expenditure and broad money supply (the macroeconomic policy variables used) were found to have significant positive impact on the agricultural value chain. Energy was found to also have a direct statistically significant impact on agricultural value chain. Based on the results, it is recommended that there should be an enabling macroeconomic policy framework, which gives emphasis to improved budgetary allocation to the agricultural sector, increases money supply, and promotes agencies that can directly impact the level of finance to agricultural value chain related businesses in Nigeria. Above all, electricity supply should be enhanced.

scholarly journals Do financial systems spur economic growth in the USA? An empirical investigation

2019 ◽  
Vol 66 (2) ◽  
pp. 165-185
Author(s):  
Sheilla Nyasha ◽  
N.M. Odhiambo
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Positive Impact ◽  
The United States ◽  
Bounds Testing ◽  
Financial Systems ◽  
Development Indicators ◽  
Distributed Lag ◽  
Long Run ◽  
The Usa

In this paper, we use the autoregressive distributed lag (ARDL) bounds testing approach to examine the dynamic impact of both bank-based financial development and market-based financial development on economic growth in the United States of America (USA) during the period 1980 to 2012. In order to adequately capture the depth and width of the USA?s financial system, we used both bank-based and marketbased financial development indices as proxies for bank-based and market-based financial systems. These indices were constructed from a number of bank- and market-based financial development indicators, using the method of means-removed average. Our empirical results reveal that both bank-based and market-based financial development have a positive impact on economic growth in the USA. These results apply irrespective of whether the regression analysis is conducted in the long run or in the short run. We, therefore, recommend that both pro-bank-based and pro-market-based financial sector development policies should be pursued in the USA - in order to bolster real sector growth and economic development.

scholarly journals Dynamics of Financial Development, Economic Growth, and Poverty Alleviation: The Indonesian Experience

2018 ◽  
Vol 13 (1) ◽  
pp. 17-30 ◽  
Author(s):  
Sovia Dewi ◽  
M. Shabri Abd. Majid ◽  
Salina Kassim ◽  
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Poverty Reduction ◽  
Financial Sector ◽  
Poverty Rate ◽  
Development Economic ◽  
Annual Data ◽  
Distributed Lag ◽  
Long Run ◽  
The Government

Abstract Although the poverty rate in Indonesia has been declining in the last several years, the rate of poverty decline is slowing down. In order to achieve its poverty reduction target within the stipulated time period, the government has stepped up efforts to enhance the contribution of the financial sector towards poverty reduction. This study aims to empirically explore the interlinkages between financial sector development and poverty reduction in Indonesia. Focusing on annual data covering the period from 1980 to 2015, the study adopts the Autoregressive Distributed Lag (ARDL) cointegration approach to examine the long-run relationship between the variables. The study found that there is a long-run relationship between financial development, economic growth, and poverty reduction in Indonesia. It also documented a unidirectional causality running from the financial sector to poverty reduction and a bidirectional causality between economic growth and poverty reduction. Therefore, policies to ensure the conducive growth of the financial sector would go a long way in promoting the economy, creating employment opportunities, and consequently accelerating poverty eradication

scholarly journals Financial Development, Financial Openness and Economic Growth in Nigeria

2021 ◽  
Vol 11 (3) ◽  
Author(s):  
Christian E. Bassey ◽  
Okoiarikpo Benjamin Okoi ◽  
Ikpe Kingsley Imoh
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Distress ◽  
Positive Impact ◽  
Financial Openness ◽  
Insurance Sector ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Impact

This study examined the impact of financial development and financial openness on economic growth in Nigeria between 1981 and 2019. This was done through the use of the Auto-Regressive Distributed Lag (ARDL) model. In doing this, the ratio of credit to the private sector to the GDP and broad money to narrow money were used as measures of financial development and financial openness respectively. The study found that financial development has a positive and insignificant impact on economic growth in Nigeria in the long and short-run. The study also found that financial openness has a negative and insignificant impact on economic growth in Nigeria in the long-run. The results of the study further revealed that simultaneous existence of financial development and financial openness has an insignificant but positive impact on economic growth in Nigeria in the long-run. Based on the findings, the study recommended that the CBN should increase its efforts towards the regulation and supervision of the financial sector to reduce the incidence of financial distress. The study also recommended that efforts to develop the mortgage and insurance sector and the capital market should be intensified through regulatory improvements, improvements in the instruments in use in the market as well as public enlightenment programs to increase awareness of the potentials of the mortgage, insurance and capital markets. The final recommendation made by the study is that more restrictions should be placed on the inflow of capital in and out of the country to guard against sudden capital flow reversals.

Impact of Capital Inflows on Manufacturing Exports and Economic Growth: An Empirical Evidence from Nigeria

2020 ◽  
Vol 12 (1) ◽  
pp. 1
Author(s):  
Abiodun Sunday Olayiwola ◽  
Kehinde Elizabeth Joseph
Keyword(s):  
Economic Growth ◽  
Positive Impact ◽  
Manufacturing Sector ◽  
Capital Inflows ◽  
Annual Data ◽  
Economic Policies ◽  
Distributed Lag ◽  
Long Run ◽  
Oil Export ◽  
The Government

A lot of studies have examined the relationship between capital inflows and economic growth in Nigeria; Most of these studies examined either oil export, non-oil export or total exports, without specific emphasis on manufacturing export; given that manufacturing export is fundamental to economic growth. In this case, we examined the dynamic impact of capital inflows on manufacturing exports and economic growth in Nigeria between 1981 and 2017 using annual data. Data collected were analyzed using Autoregressive Distributed Lag (ARDL) econometric techniques and the results revealed that capital inflows have significant and positive impact on economic growth (t= 4.42884, p< 0.005) both in the short and long run; and positive but statistically insignificant impact on manufacturing exports (t= 0.73, p> 0.05). Therefore, the study concluded that capital inflows have significant impact on economic growth but no impact on the manufacturing exports in Nigeria; and we recommend that the government and monetary authorities’ in Nigeria should formulate economic policies that will promote manufacturing exports through adequate and efficient infrastructural facilities that would encourage the needed capital inflows to the manufacturing sector and increase the production of goods for local consumption and export.

scholarly journals Does Trade Liberalization Affect Energy Saving in Nigeria?

2018 ◽  
Vol 6 (4) ◽  
Author(s):  
Aliyu Alhaji Jibrilla
Keyword(s):  
Energy Use ◽  
Energy Intensity ◽  
Trade Openness ◽  
Value Added ◽  
Annual Data ◽  
Distributed Lag ◽  
Long Run ◽  
Dynamic Ols ◽  
Short Run ◽  
Auto Regressive

The study empirically examines the role of trade openness and other determinants in explaining the intensity of energy use in Nigeria using annual data from 1981 to 2015. The paper uses an auto-regressive distributed lag (ARDL) model in interpreting both long-run energy intensity as a co integrating relation, and its short-run dynamics. The robustness of ARDL results is verified using Dynamic OLS (DOLS) estimation technique. The results provide evidence of a Cointegration relation between energy intensity and its determinants. The results provide evidence that trade only significantly reduces energy intensity in the short run. Meanwhile, the results also show that income growth and industry value added have significant reducing effects on energy intensity. The results also raise some important policy issues, particularly on the inflows of foreign aid.

scholarly journals Monetary Policies and the Achievement of Bank Profit Objective

2021 ◽  
Vol 10 (2) ◽  
pp. 201-220
Author(s):  
Alexander Ehimare Omankhanlen ◽  
Noah Ilori ◽  
Areghan Isibor ◽  
Lawrence Uchenna Okoye
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Money Supply ◽  
Policy Instruments ◽  
Bank Profitability ◽  
Monetary Policies ◽  
Correction Model ◽  
Distributed Lag ◽  
Long Run ◽  
Auto Regressive

Abstract This study examined the nexus between monetary policy and the achievement of a bank’s profit objective. There have been lots of arguments about the benefits of monetary policy implementation on deposit money bank’s operations, since the policies have been seen to impact on their performance. This study was carried out to establish the influence of variables like Liquidity Ratio, Interest and Money supply (M2), which are used as monetary policy instruments, on deposit money bank profitability objective. The study covers the period from 2002-2019. The Auto Regressive Distributed Lag and Error correction model were adopted in the analysis of the data. The study revealed that there was a positive long run relationship between Liquidity Ratio and deposit money bank’s profitability; there also existed a negative long run relationship between interest rate and deposit money bank profitability; lastly, there existed a positive long run relationship between Money Supply (M2) and deposit money bank’s profitability. Based on the findings, monetary authorities should put in place measures for Liquidity ratio, interest rates and M2 implementation to aid deposit money banks operations in the achievement of their profit objective.

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