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Impact of remittances on domestic investment: the role of institutional and financial development
Jönköping University, Jönköping International Business School, JIBS, Economics, Finance and Statistics. Jönköping University, Jönköping International Business School, JIBS, Center for Family Enterprise and Ownership.
2013 (English)In: Global Review of Accounting and Finance, ISSN 1838-1413, Vol. 4, no 2, 65-84 p.Article in journal (Other academic) Published
Abstract [en]

A standard view in development economics is that developing countries are unable to undertake the required investment because of inadequate financing, poor institutions and undeveloped financial markets. This paper investigates the impact of remittance inflows into the developing countries on investment under different levels of institutional and financial development. The empirical analysis is carried on a sample of 79 developing countries covering the period 1995-2005. The estimates suggest that remittance inflows, sound institutions and well-developed financial sector increase domestic investment. Moreover, the results also indicate that when the institutional setting and the depth of financial intermediation are such that access to external finance is limited, remittance inflows are an important source of financing investment. The findings are robust to alternative static and dynamic panel estimators and different measures of institutional quality and financial development. An important implication of these findings is that the extent to which an economy benefits from remittance inflows is driven by the prevailing institutional environment and the level of financial development.

Place, publisher, year, edition, pages
2013. Vol. 4, no 2, 65-84 p.
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-17702OAI: oai:DiVA.org:hj-17702DiVA: diva2:505136
Available from: 2012-02-23 Created: 2012-02-23 Last updated: 2014-03-10Bibliographically approved
In thesis
1. Essays on Financing and Returns on Investment
Open this publication in new window or tab >>Essays on Financing and Returns on Investment
2011 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation consists of an introductory chapter and three independent essays on financing investment and their returns. The first essay studies the impact of remittances on domestic investment. The analysis is carried out with a focus on the moderating roles of domestic financial development and institutional quality. The empirical results suggest that remittance inflows are associated with increased domestic investment spending, particularly under conditions of inadequate financial intermediation and poor institutional quality. The second essay evaluates whether remittance inflows into the developing world impedes or spurs manufacturing growth. This study uses manufacturing data on a sample of 40 remittance dependent economies over the period from 1991 to 2004. The results suggest that remittance inflows accelerate manufacturing growth. This evidence is robust to industry- and year-specific effects, a range of country level control variables, and a number of estimators. The final essay examines the monitoring role of large shareholders and returns on investment. Specifically, the paper investigates the relevance of intrinsic motives of the large shareholder to monitor management in order to induce optimal return on investment. The findings suggest that large shareholders are actuated by both intrinsic and extrinsic motives to minimize managerial opportunism and inefficiency.

Place, publisher, year, edition, pages
Jönköping International Business School, 2011. 165 p.
Series
JIBS Dissertation Series, ISSN 1403-0470 ; 74
National Category
Economics
Identifiers
urn:nbn:se:hj:diva-17704 (URN)978-91-86345-25-9 (ISBN)
Opponent
Supervisors
Available from: 2012-02-23 Created: 2012-02-23 Last updated: 2012-02-23Bibliographically approved

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Citation style
  • apa
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  • asciidoc
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