The Symmetric and Asymmetric Effect of Remittances on Financial Development: Evidence from South Africa

Investigating the remittance-financial development relationship is an ongoing endeavor among economists and policy makers. Building improving on existing work, this study considers possibility that relation between remittances financial potentially asymmetric. This applies linear ARDL captures of asymmetrical by applying non-linear Autoregressive Model (NARDL). Using NARDL, attempt made to estimate short-run long-run asymmetric responses through positive negative partial sum decompositions changes in remittances. To assess robustness NARDL estimates, a battery tests were employed, including nonlinear versions fully modified ordinary least squares (FMOLS). Annual data series from 1980 2017, derived World Development Indicators, Fred Economic Penn Tables used for study. The results reveal significant impact development, whereas estimations suggest both shock long run: percentage (%) increase brings about 0.121568 percent one-percent decrease produces 0.33363 development.