Remittances and Financial Development in Transitional Markets. Does the Moderating Role of Technology Matter?
Remittances and Financial Development in Transitional Markets. Does the Moderating Role of Technology Matter?

Summary/Abstract: Objectives: This study explored the influence of remittance on financial development in transitional markets. It examined if financial development was influenced by the complementarity between remittance and technology in transitional markets. In other words, it investigates whether technology advancement channel is essential in ensuring that remittances are directed towards financial development. Prior Work: What triggered the study is that existing literature produced inconclusive, mixed and divergent results. Approach: The study employed the Hansen (2000) threshold regression model and the panel corrected standard errors approach. Results: The results indicate that remittances on their own negatively influence financial development but at the very most positively influence financial development in a non-significant manner. Technology had a non-significant enhancing impact on financial development. The complementarity between remittance and technology significantly improved financial development. Implications: Transitional markets must implement policies geared at enhancing remittance inflow and technology advancement to deepen the financial sector. Further studies on the subject matter need to focus on examining more than one threshold levels of remittances above which significant financial development occurs. Value: The study indicated that technology development enhances remittances’ ability to improve financial development in transitional markets.

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