Workers' remittances and financial sector performance: the Nigerian experience.

Abstract

This study examined the direction and magnitude of remittances effect on .financial development in Nigeria. Using DMB deposit, credit, loan and liquidity to proxy for .financial development, and adopting a structural dynamic model, we found that workers' remittances show a sign of positive effect on demand deposit, positive and significant effect on liquidity and positive and significant effect on DMB credit and loan. This implies that workers' remittances in Nigeria are important drivers of financial deepening. Thus, effort at making saving attractive and reducing parallel market premium will unarguably raise the proportion of banked remittances and improve financial development.