Impact of Remittances on Nigerian Financial Sector Development: An ARDL Approach
Journal Title: Gusau International Journal of Management and Social Sciences - Year 2021, Vol 4, Issue 2
Abstract
The paper investigates the impact of remittances on financial sector development in Nigeria using the time series data for the period 1986-2019. The study employed secondary data which was subjected to pre estimation tests to establish the purpose. Results of the unit root indicated the combination of stationarity of the series I(0) and I(1), the F- bound test for cointegration reveals long run relationship both in the upper and lower segment, this warrants the permissibility of adoption of Autoregressive distributed lag model. The coefficient of Error Correction Mechanism is negative and statistically significant, convergence of the model to equilibrium from the short run disturbances is therefore certain for the robustness purpose. The results of the long run ARDL bound test for cointegration showed that personal remittances positively influence domestic credit to private sector Proxy for financial sector development by 339%. Conversely, Domestic credit to private sector is negatively affected by interest rate spread and gross savings in Nigerian financial sector. The study therefore recommends the federal government of Nigeria should ensure provision and implementation of sound economic policies which would virtually attract and trigger remittances to Nigeria. This can be accomplished through discrete monetary policies which would attract investment and encourage remittances.
Authors and Affiliations
Nura HUSSAINI, Ibrahim MUSA, Dayyabu MUHAMMAD
Keywords
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