The Impact of Workers’ Remittances on Financial Market Development: A Case Study for Developing Countries

Abstract

Although workers’ remittances inflows have grown gradually over the years andshowed a sharp rise after 2000’s in the developing countries; the effect of remittanceson financial development did not receive deserved attention from academic scholars.Yet, the effect of remittances on financial development is very important issue as thefinancial development plays very important role in rising economic growth or reducingpoverty. Thus, main objective of this study is to explore the possible effects of workersremittances on financial market developments by employing dynamic panel datamethod for the period from 2002 to 2014. Our empirical results prove that there is nosignificant correlation between financial developments and remittance inflows. Yet, wehave found that financial developments are positively correlated with investments whilethey are negatively correlated with inflation and economic growth.