Evaluating the Relationship between Financial Inclusion, Remittance and Economic Growth: A Panel Analysis of ECOWAS Cross-Sectional Countries.

Abstract

This research intends to evaluate the relationship between financial inclusion, remittances, and GDP per capita among the cross-sectional of 15 Countries that make up The Economic Community of West African States (ECOWAS) within the timeline of 1970 to 2017. The research focuses on how net financial flows as an indicator of financial inclusion and remittances, percentage of GDP contributes or affect GDP per capita. The empirical result was derived by adopting Vector Error Correction Model (VECM) after finding co-integration in Johansen Co-integration Test. The first VECM between net financial flows as an independent variable and GDP per capita as a dependent variable shows there is no long-run causality relationship existing among the variables using the first difference Unite Root Test (URT) which shows it is stationary, while the Wald Test established a short-run causality relationship between the variables. The second VECM between remittances as an independent variable and GDP per capita as a dependent variable indicates a long-run causality relationship among the variables with a first difference (URT); Wald Test indicates a short-run causality relationship among the variables. The remaining variables showed there is no long-run causality running from independent variables to the dependent variables.