Linking remittances with financial development and institutions: a study from selected MENA countries

This paper seeks to examine the effect of remittances on economic growth in Middle East and North Africa (MENA) countries. Using unbalanced panel data covering a sample of 12 MENA countries over the period 1984-2012, we studied the hypothesis that the effect of remittances on economic growth varies depending on the level of financial development and institutional environment in recipient countries. We use GMM estimation in which we address the endogeneity of remittances. Our results reveal a complementary relationship among financial development and remittances to ensure economic growth. The estimations also show that remittances promote growth in countries with a developed financial system and a strong institutional environment