The Effect of International Remittances on Financial Development: Turkish Experience in the Period of 1974-2019

Abstract

In this study, workers’ remittances on financial development in Turkey are analysed using the Autoregressive Distributed Lag Bound (ARDL) method from 1974 to 2019. In the analysis, the dependent variable, which is the domestic credit to the private sector by banks (percent of GDP), is used as an indicator for financial development. In addition to international workers’ remittances, other independent variables include GDP per capita, interest rate, and inflation. International remittances are found to affect financial development positively; however, the effect is slight. In addition, growth affects financial development positively, inflation negatively, and the impact of interest is statistically insignificant.