The Role of Remittances in Financial Development: Evidence from Nonlinear ARDL and Asymmetric Causality |
MEHTA, Ahmed Muneeb
(Hailey College of Banking and Finance, University of the Punjab)
QAMRUZZAMAN, Md. (School of Business and Economics, United International University) SERFRAZ, Ayesha (Institute of Administrative Sciences, University of the Punjab) ALI, Asad (Hailey College of Banking and Finance, University of the Punjab) |
1 | Qamruzzaman, M., & Jianguo, W. (2018b). Nexus between financial innovation and economic growth in South Asia: Evidence from ARDL and nonlinear ARDL approaches. Financial Innovation, 4(1), 20. https://doi.org/10.1186/s40854-018-0103-3 DOI |
2 | Abdul Majeed, M. M. (2019). Contribution of tourism and foreign direct investment to the gross domestic product: Econometric analysis in the case of Sri Lanka. The Journal of Asian Finance, Economics, and Business, 6(4), 109-114. https://doi.org/10.13106/jafeb.2019.vol6.no4.109 DOI |
3 | Abu-Bader, S., & Abu-Qarn, A. (2008). Financial development and economic growth: Empirical evidence from MENA countries. Review of Development Economics, 2(3), 803-817. https://doi.org/10.1111/j.1467-9361.2008.00427 |
4 | Acosta, P. A., Baerg, N. R., & Mandelman, F. S. (2009). Financial development, remittances, and real exchange rate appreciation. Economic Review, 94, 1-15. http://hdl.handle.net/10986/4797 |
5 | Adams Jr, R. H. (2006). Migration, remittances, and development: The critical nexus in the Middle East and North Africa. Paper presented at the United Nations Expert Group Meeting on International Migration and Development in the Arab Region, Beirut, 15-17 May 2006 (pp.1-18). https://www.un.org/en/development/desa/population/events/pdf/other/turin/P01_Adams.pdf |
6 | Adjasi, C. K. D., & Biekpe, N. B. (2006). Stock market development and economic growth: The case of selected African countries. African Development Review, 18(1), 144-161. https://doi.org/10.1111/j.1467-8268.2006.00136.x DOI |
7 | Ahmed, H. A., & Uddin, M. G. S. (2009). Export, imports, remittance, and growth in Bangladesh: An empirical analysis. Trade and Development Review, 2(2), 79-92. http://tdrju.net/index.php/tdr/article/viewFile/7/23#:-:text=GDP%20growth%20of%20Bangladesh%20has,(World%20Bank%2C%202005). |
8 | Kapetanios, G., Shin, Y., & Snell, A. (2006). Testing for cointegration in nonlinear smooth transition error correction models. Econometric Theory, 22(2), 279-303. https://www.jstor.org/stable/4093226 DOI |
9 | Hatemi, A., & Uddin, G. S. (2014). On the causal nexus of remittances and poverty reduction in Bangladesh. Applied Economics, 46(4), 374-382. https://doi.org/10.1080/00036846.2013.844331 DOI |
10 | Kapetanios, G., Shin, Y., & Snell, A. (2003). Testing for a unit root in the nonlinear STAR framework. Journal of Econometrics, 112(2), 359-379. https://doi.org/10.1016/S0304-4076(02)00202-6 DOI |
11 | Kwiatkowski, D., Phillips, P., Schmidt, P., & Shin, Y. (1992). Testing the null hypothesis of stationarity against the alternative of a unit root: How sure are we that economic time series have a unit root? Journal of Econometrics, 54(1-3), 159-178. https://doi.org/10.1016/0304-4076(92)90104-Y DOI |
12 | Khan, Z. S., & Islam, S. (2013). The effects of remittances on inflation: evidence from Bangladesh. Journal of Economics and Business Research, 19(2), 198-208. https://www.uav.ro/jour/index.php/jebr/article/view/94 |
13 | Kruse, R. (2011). A new unit root test against ESTAR based on a class of modified statistics. Statistical Papers, 52(1), 71-85. https://doi.org/10.1007/s00362-009-0204-1 DOI |
14 | Kumar, B. (2019). Remittances, poverty, and welfare: Evidence from Cumilla, Bangladesh. American Journal of Data Mining and Knowledge Discovery, 4(1), 46-52. https://doi.org/10.11648/j.ajdmkd.20190401.17 DOI |
15 | Lee, J. W., & Zhao, T. F. (2014). The dynamic relationship between stock prices and exchange rates: Evidence from Chinese stock markets. Journal of Asian Finance, Economics, and Business, 1(1), 5-14. https://doi.org/10.13106/jafeb.2014.vol1.no1.5. DOI |
16 | Raihan, S., Sugiyarto, G., Bazlul, H. K., & Jha, S. (2009). Remittances and household welfare: A case study of Bangladesh (Working Paper189). Asian Development Bank. https://www.adb.org/sites/default/files/publication/28402/economics-wp189.pdf |
17 | Qamruzzaman, M., & Karim, S. (2020b). Nexus between economic volatility, trade openness, and FDI: An application of ARDL, NARDL, and asymmetric causality. Asian Economic and Financial Review, 10(7), 790-807. https://doi.org/10.18488/journal.aefr.2020.107.790.807 DOI |
18 | Qamruzzaman, M., & Wei, J. (2018). Financial innovation, stock market development, and economic growth: An application of ARDL model. International Journal of Financial Studies, 6(3), 69. https://doi.org/10.3390/ijfs6030069 DOI |
19 | Qamruzzaman, M., & Wei, J. (2019). Financial innovation and financial inclusion nexus in South Asian Countries: Evidence from symmetric and asymmetric panel investigation. International Journal of Financial Studies, 7(4), 61. https://doi.org/10.3390/ijfs7040061 DOI |
20 | Shahzad, S. J. H., Adnan, N., Sajid, A., & Naveed, R. (2014). Impact of remittances on financial development in South Asia. Review of Economic and Business Studies, 7(2), 11-29. http://rebs.feaa.uaic.ro/articles/pdfs/206.pdf |
21 | Batuo, M. E., Guidi, F., & Mlambo, K. (2010). Financial development and income inequality: Evidence from African Countries (Working Paper 25658). African Development Bank. https://mpra.ub.uni-muenchen.de/25658/1/MPRA_paper_25658.pdf |
22 | Shin, Y., Yu, B., & Greenwood-Nimmo, M. (2014). Modeling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In W. Horrace & R. Sickles (Eds.)., Festschrift in Honor of Peter Schmidt: Econometrics methods and applications (pp. 281-314): Singapore: Springer. |
23 | Qamruzzaman, M., & Karim, S. (2020a). Do remittance and financial innovation causes stock price through financial development: An application of the nonlinear framework. Fourrages, 242(7), 38-68. |
24 | Al Mamun, M., Sohag, K., Samargandi, N., & Yasmeen, F. (2016). Does remittance fuel labor productivity in Bangladesh? The application of an asymmetric nonlinear ARDL approach. Applied Economics, 48(50), 4861-4877. https:doi.org/10.1080/00036846.2016.1167825 DOI |
25 | Ali, U., Shan, W., Wang, J. J., & Amin, A. (2018). Outward foreign direct investment and economic growth in China: Evidence from asymmetric ARDL approach. Journal of Business Economics and Management, 19(5), 706-721. https:doi.org/10.3846/jbem.2018.6263 DOI |
26 | Ambrosius, C., & Cuecuecha, A. (2016). Remittances and the use of formal and informal financial services. World Development, 77, 80-98. https://doi.org/10.1016/j.worlddev.2015.08.010 DOI |
27 | Ang, J. B. (2009). Financial development and the FDI-growth nexus: the Malaysian experience. Applied Economics, 41(13), 1595-1601. https://doi.org/10.1080/00036840701222553 DOI |
28 | Banerjee, A., Dolado, J., & Mestre, R. (1998). Error-correction mechanism tests for cointegration in a single-equation framework. Journal of Time Series Analysis, 19(3), 267-283. https://doi.org/10.1111/1467-9892.00091 DOI |
29 | Bong, A., & Premaratne, G. (2019). The impact of financial integration on economic growth in Southeast Asia. The Journal of Asian Finance, Economics, and Business (JAFEB), 6(1), 107-119. https://doi.org/10.13106/jafeb.2019.vol6.no1.107 DOI |
30 | Brock, W., Dechert, W. D., & Scheinkman, J. (1987). A test for independence based on the correlation dimension (Economics Working Paper SSRI-8702). The University of Wisconsin. http://ecsocman.hse.ru/data/917/582/1217/article.pdf |
31 | Menyah, K., Nazlioglu, S., & Wolde-Rufael, Y. (2014). Financial development, trade openness, and economic growth in African countries: New insights from a panel causality approach. Economic Modelling, 37, 386-394. https://doi.org/10.1016/j.econmod.2013.11.044 DOI |
32 | Masuduzzaman, M. (2014). Workers' remittance inflow, financial development, and economic growth: A Study on Bangladesh. International Journal of Economics and Finance, 6(8). https://doi.org/10.5539/ijef.v6n8p247 DOI |
33 | Md, Q., & Salma, K. (2020). ICT investment impact on human capital development through the channel of financial development in Bangladesh: An investigation of quantile ARDL and Toda-Yamamoto test. Academic Journal of Interdisciplinary Studies, 9(5). https://doi.org/10.36941/ajis-2020-0090 |
34 | Mendoza, E. G., Quadrini, V., & Rios-Rull, J.-V. (2009). Financial integration, financial development, and global imbalances. Journal of Political Economy, 117(3), 371-416. http://dx.doi.org/10.1086/599706 DOI |
35 | Motelle, S. I. (2011). The role of remittances in financial development in Lesotho: Evidence from alternative measures of financial development. Journal of Development and Agricultural Economics, 3(6), 241-251. https://academicjournals.org/journal/JDAE/article-full-text-pdf/DA52C3140329 |
36 | Muktadir-Al-Mukit, D., Shafiullah, A., & Sajib, A. H. (2013). Determination of causality between remittance and import: Evidence from Bangladesh. International Journal of Business and Social Research (IJBSR), 3(3), 11-22. https:/doi.org/10.18533/ijbsr.v3i3.56 |
37 | Nguyen, D. D., Dinh, H. C., & Nguyen, D. V. (2020). Promotion of Fintech application for the modernization of the bankingfinance system in Vietnam. The Journal of Asian Finance, Economics, and Business, 7(6), 127-131. https://doi.org/10.13106/jafeb.2020.vol7.no6.127 DOI |
38 | Traverso, S. (2016). How to escape from a poverty trap: the case of Bangladesh. World Development Perspectives, 4, 48-59. https://doi.org/10.1016/j.wdp.2016.12.005 DOI |
39 | Sobiech, I. (2019). Remittances, finance, and growth: Does financial development foster the impact of remittances on economic growth? World Development, 113, 44-59. https://doi.org/10.1016/j.worlddev.2018.08.016 DOI |
40 | Toda, H. Y., & Yamamoto, T. (1995). Statistical inference in vector autoregressions with possibly integrated processes. Journal of Econometrics, 66(1-2), 225-250. https://doi.org/10.1016/0304-4076(94)01616-8 DOI |
41 | Chowdhury, M. (2016). Financial development, remittances, and economic growth: Evidence using a dynamic panel estimation. Margin: The Journal of Applied Economic Research, 10(1), 35-54. DOI |
42 | Siddique, A., Selvanathan, E. A., & Selvanathan, S. (2012). Remittances and economic growth: Empirical evidence from Bangladesh, India, and Sri Lanka. Journal of Development Studies, 48(8), 1045-1062. https://doi.org/10.1080/00220388.2012.663904 DOI |
43 | Broock, W. A., Scheinkman, J. A., Dechert, W. D., & LeBaron, B. (1996). A test for independence based on the correlation dimension. Econometric Reviews, 15(3), 197-235. https://doi.org/10.1080/07474939608800353 DOI |
44 | Brown, R. P., Carmignani, F., & Fayad, G. (2013). Migrants' remittances and financial development: Macro-and micro-level evidence of a perverse relationship. The World Economy, 36(5), 636-660. https://doi.org/10.1111/twec.12016 DOI |
45 | Buchenau, J. (2008). Migration, remittances, and poverty alleviation in Bangladesh: Report and proposal. Dhaka: UNDP |
46 | Calderon, C., Fajnzylber, P., & López, J. H. (2007). Remittances and growth: The role of complementary policies: Lessons from Latin America. https://publications.iadb.org/publications/english/document/Remittances-and-Development-Lessonsfrom-Latin-America.pdf |
47 | Chowdhury, M. B. (2011). Remittances flow and financial development in Bangladesh. Economic Modelling, 28(6), 2600-2608. https://doi.org/10.1177/0973801015612666 DOI |
48 | Coulibaly, D. (2015). Remittances and financial development in Sub-Saharan African countries: A system approach. Economic Modelling, 45, 249-258. https://doi.org/10.1016/j.econmod.2014.12.005 DOI |
49 | Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366a), 427-431. https://doi.org/10.1080/01621459.1979.10482531 DOI |
50 | Demirguc-Kunt, A. R., & Peria, M. M. (2010). Do remittances promote financial development? Journal of Development Economics, 96, 255-264. https://doi.org/10.1016/j.jdeveco.2010.10.005 DOI |
51 | Paul, B. P. (2014). Testing export-led growth in Bangladesh: An ARDL bounds test approach. International Journal of Trade, Economics, and Finance, 5(1), 1-5. https://doi.org/10.7763/IJTEF.2014.V5.331 DOI |
52 | Nguyen, H. H. (2020). Impact of foreign direct investment and international trade on economic growth: Empirical study in Vietnam. The Journal of Asian Finance, Economics, and Business, 7(3), 323-331. https://doi.org/10.1310/jafeb.2020.vol7.no3.323 DOI |
53 | Nyasha, S., & Odhiambo, N. M. (2016). Banks, stock market development, and economic growth in Kenya: An empirical investigation. Journal of African Business, 18(1), 1-23. https://doi.org/10.1080/15228916.2016.1216232 DOI |
54 | Orozco, M. (2009). Emerging markets for Rwanda: remittance transfers, its marketplace, and financial intermediation. http://archive.thedialogue.org/PublicationFiles/Rwanda%20Remittance%20transfers%20report.pdf. |
55 | Pesaran, B., & Pesaran, M. H. (2009). Time series econometrics: Using Microfit 5.0: Oxford University Press Oxford. |
56 | Pesaran, M. H., Shin, Y., & Smith, J. R. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16, 289-326. https://doi.org/10.1002/jae.616 DOI |
57 | Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326. https://doi.org/10.1002/jae.616 DOI |
58 | Phillips, P. C. B., & Perron, P. (1988). Testing for a unit root in time series regression. Biometrika, 75(2), 335-346. https://doi.org/10.1093/biomet/75.2.335 DOI |
59 | Posso, A. (2015). Remittances and financial institutions: Is there a causal linkage? The BE Journal of Macroeconomics, 15(2), 769-789. https://doi.org/10.1515/bejm-2014-0116 DOI |
60 | Esteves, R., & Khoudour-Casteras, D. (2011). Remittances, capital flows, and financial development during the mass migration period, 1870-1913. European Review of Economic History, 15(3), 443-474. https://doi.org/10.2307/23226530 DOI |
61 | Faheem, M., Mohamed, A., Farooq, F., & Ali, S. (2019). Do migrant remittances spur financial development in Pakistan? Evidence from linear and nonlinear ARDL approach. Review of Economics and Development Studies, 5(4), 869-880. https://doi.org/10.26710/reads.v5i4.905 DOI |
62 | Fayissa, B., & Nsiah, C. (2012). Financial development and remittances in Africa and the Americas: A panel unit root tests and panel cointegration analysis. Tennesse: Middle Tennessee State University, Department of Economics and Finance. |
63 | Fromentin, V. (2017). The long-run and short-run impacts of remittances on financial development in developing countries. The Quarterly Review of Economics and Finance, 66, 192-201. doi:10.1016/j.qref.2017.02.006 DOI |
64 | Hasan, S. B., Akhter, R., & Saha, S. (2019). Impact of remittance on economic growth in Bangladesh. American Journal of Trade and Policy, 6(1), 41-48. https://doi.org/10.18034/ajtp.v6i1.346 DOI |
65 | Galadima, M. D., & Aminu, A. W. (2020). Nonlinear unit root and nonlinear causality in natural gas-economic growth nexus: Evidence from Nigeria. Energy, 190, 116415. https://doi.org/10.1016/j.energy.2019.116415 DOI |
66 | Ghatak, S., & Siddiki, J. U. (2001). The use of the ARDL approach in estimating virtual exchange rates in India. Journal of Applied Statistics, 28(5), 573-583. https://doi.org/10.1080/02664760120047906 DOI |
67 | Gupta, S., Pattillo, C. A., & Wagh, S. (2009). Effect of remittances on poverty and financial development in Sub-Saharan Africa. World Development, 37(1), 104-115. https://doi.org/10.1016/j.worlddev.2008.05.007 DOI |
68 | Qamruzzaman, M. (2017). Innovation and economic growth: evidence from financial institutional innovation. RISUSJournal on Innovation And Sustainability, 8(2), 126-141. https://doi.org/10.24212/2179-3565.2017v8i2p126-141 DOI |
69 | Pradhan, M. A., & Khan, G. U. (2015). Role of remittance for improving quality of life: Evidence from Bangladesh. Turkish Economic Review, 2(3), 160-168. https://doi.org/10.1453/ter.v2i3.328 |
70 | Pradhan, R. P., Arvin, M. B., Hall, J. H., & Bahmani, S. (2014). Causal nexus between economic growth, banking sector development, stock market development, and other macroeconomic variables: The case of ASEAN countries. Review of Financial Economics, 23(4), 155-173. https://doi.org/10.1016/j.rfe.2014.07.002 DOI |
71 | Qamruzzaman, M., Bardhan, A., & Nasya, S. (2020). Nexus between remittance, nonperforming loan, money supply, and financial volatility: An application of ARDL. International Journal of Applied Economics, Finance, and Accounting, 8(1), 11-29. https://doi.org/10.33094/8.2017.2020.81.11.29 DOI |
72 | Qamruzzaman, M., & Jianguo, W. (2018). Do foreign direct investment, financial innovation, and trade openness coexist in the development process: Evidence from selected Asian and African Countries? British Journal of Economics, Finance and Management Sciences, 16(1), 73-94. |
73 | Qamruzzaman, M., & Jianguo, W. (2018a). Investigation of the asymmetric relationship between financial innovation, banking sector development, and economic growth. Quantitative Finance and Economics, 2(4), 952-980. https://doi.org/10.3934/QFE.2018.4.952 DOI |