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The Role of Workers’ Remittances in Development of Jordanian Banking Sector

Received: 26 October 2016     Accepted: 7 November 2016     Published: 2 December 2016
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Abstract

This paper examines the impact of workers’ remittances on a key indicator of banking sector development using Jordanian data over the period 1964 to 2013. The results are obtained using cointegration analysis depending on the E-G procedure test within the ECM framework. The study has found evidence of significant positive effects of remittances on the credit to the private to GDP ratio. Any increase in the workers' remittances, increases the level of banking sector development. In addition, a test for asymmetric relationship between variables is implemented, and results show that this relation does not exist.

Published in International Journal of Business and Economics Research (Volume 5, Issue 6)
DOI 10.11648/j.ijber.20160506.16
Page(s) 227-234
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Workers' Remittances, Banking Sector Development, Engle-Granger Procedure, ECM, Asymmetric Cointegration Test

References
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[5] Khan, M. S. and Abdelhak S. Senhadji (2000). Financial development and economic growth: An overview. Working Paper No. 00/209, International Monetary Fund; Washington, D.C.
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[7] Solimano, A. (2003). Workers remittances to the Andean Region: mechanisms, costs and development impact. Multilateral Investment Fund-IDB’s Conference on Remittances and Development, Quito-Ecuador.
[8] Giuliano, P. and M. Ruiz-Arranz (2009). "Remittances, financial development, and growth." Journal of Development Economics 90(1).
[9] Hunte, C. K. (2004). "Workers' Remittances, Remittance Decay and Financial Deepening in Developing Countries." American Economist 48(2): 82-95.
[10] Aggarwal, R., Demirgüç-Kunt, A. and Peria, M. (2011). Do workers' remittances promote financial development. Journal of Development Economics, 96.
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[19] Engle, R. F. and Granger, C. W. J. (1987). "Co-integration and error correction: representation, estimation, and testing." Econometrica: Journal of the Econometric Society 55(2).
[20] Mackinnon, J. G. (1991). Critical values for cointegration tests. Chapter 13 in Long-run Economic relationships: Readings in cointegration. 3rd ed. R. F. Engle and C. W. Granger. Oxford University Press.
[21] Engle, R. F. and Yoo, B. S. (1987). "Forecasting and testing in co-integrated systems" Journal of Econometrics 35(1).
[22] Acosta, P. A., Baerg, N. R. and Mandelman, F. S. (2009). "Financial development, remittances, and real exchange rate appreciation." Economic Review 94(1).
[23] MacKinnon, J. (1996) Numerical distribution functions for unit root and cointegration test, Journal of Applied Econometrics, 11..
[24] Al-Assaf, Ghazi (2014) Testing for Asymmetric Cointegration Relationship between Banking Sector Development and Trade Openness: Evidence from Jordan, Dirasat, Administrative Sciences, 41 (2).
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  • APA Style

    Alaaeddin Al-Tarawneh. (2016). The Role of Workers’ Remittances in Development of Jordanian Banking Sector. International Journal of Business and Economics Research, 5(6), 227-234. https://doi.org/10.11648/j.ijber.20160506.16

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    ACS Style

    Alaaeddin Al-Tarawneh. The Role of Workers’ Remittances in Development of Jordanian Banking Sector. Int. J. Bus. Econ. Res. 2016, 5(6), 227-234. doi: 10.11648/j.ijber.20160506.16

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    AMA Style

    Alaaeddin Al-Tarawneh. The Role of Workers’ Remittances in Development of Jordanian Banking Sector. Int J Bus Econ Res. 2016;5(6):227-234. doi: 10.11648/j.ijber.20160506.16

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  • @article{10.11648/j.ijber.20160506.16,
      author = {Alaaeddin Al-Tarawneh},
      title = {The Role of Workers’ Remittances in Development of Jordanian Banking Sector},
      journal = {International Journal of Business and Economics Research},
      volume = {5},
      number = {6},
      pages = {227-234},
      doi = {10.11648/j.ijber.20160506.16},
      url = {https://doi.org/10.11648/j.ijber.20160506.16},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20160506.16},
      abstract = {This paper examines the impact of workers’ remittances on a key indicator of banking sector development using Jordanian data over the period 1964 to 2013. The results are obtained using cointegration analysis depending on the E-G procedure test within the ECM framework. The study has found evidence of significant positive effects of remittances on the credit to the private to GDP ratio. Any increase in the workers' remittances, increases the level of banking sector development. In addition, a test for asymmetric relationship between variables is implemented, and results show that this relation does not exist.},
     year = {2016}
    }
    

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    AB  - This paper examines the impact of workers’ remittances on a key indicator of banking sector development using Jordanian data over the period 1964 to 2013. The results are obtained using cointegration analysis depending on the E-G procedure test within the ECM framework. The study has found evidence of significant positive effects of remittances on the credit to the private to GDP ratio. Any increase in the workers' remittances, increases the level of banking sector development. In addition, a test for asymmetric relationship between variables is implemented, and results show that this relation does not exist.
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    IS  - 6
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Author Information
  • Department of Business Economics, The University of Jordan, Amman, Jordan

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