An Empirical Investigation of Remittances and Financial Inclusion Nexus in Sub-Saharan Africa

Abstract

The scope of financial development has been expanding and moving gradually towards a more
inclusive development thus attention is gradually shifting to financial inclusion. It is against this background
that this study investigates the role of migrants’ remittances on financial inclusion in selected SSA countries.
Pooled Mean Group (PMG) form of panel ARDL was employed but cross-sectional dependent characteristics
of the data required the use of cross-sectional methods that cater for such properties. Consequently, XTDCCE:
Dynamic Common Correlated Effects in Stata by Ditzen (2016) and XTCCE Common Correlated Effects
estimator by Neal (2015) were used as robustness checks. For the purpose of this empirical investigation, we
collected data on Remittances, Account Ownership and Income Per Capita for twenty-seven SSA countries
based on data availability. The conclusion is that remittances have no significant effect on financial inclusion
in SSA. However, the variable demonstrates the potential to positively influence financial inclusion. Thus, there
should be concrete policy efforts in the SSA to make remittances count for inclusive growth. The study
contributes substantially by moving attention from a broad concept of financial development to Financial
Inclusion and employed a more recent panel estimating techniques to investigate the nexus between remittances
and Inclusion.