The link between remittance inflows and financial development in Ghana: Substitutes or complements?

Prempeh, Kwadwo Boateng; Kyeremeh, Christian; Danso, Felix Kwabena Article The link between remittance inflows and financial development in Ghana: Substitutes or complements? Cogent Economics & Finance Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Prempeh, Kwadwo Boateng; Kyeremeh, Christian; Danso, Felix Kwabena (2023) : The link between remittance inflows and financial development in Ghana: Substitutes or complements?, Cogent Economics & Finance, ISSN 2332-2039, Taylor & Francis, Abingdon, Vol. 11, Iss. 2, pp. 1-17, https://doi.org/10.1080/23322039.2023.2237715 This Version is available at: https://hdl.handle.net/10419/304148 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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Kwadwo Boateng Prempeh, Christian Kyeremeh & Felix Kwabena Danso To cite this article: Kwadwo Boateng Prempeh, Christian Kyeremeh & Felix Kwabena Danso (2023) The link between remittance inflows and financial development in Ghana: Substitutes or complements?, Cogent Economics & Finance, 11:2, 2237715, DOI: 10.1080/23322039.2023.2237715 To link to this article: https://doi.org/10.1080/23322039.2023.2237715 © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. Published online: 21 Jul 2023. Submit your article to this journal Article views: 1114 View related articles View Crossmark data Citing articles: 6 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oaef20 FINANCIAL ECONOMICS | RESEARCH ARTICLE The link between remittance inflows and financial development in Ghana: Substitutes or complements? Kwadwo Boateng Prempeh 1 *, Christian Kyeremeh 1 and Felix Kwabena Danso 1 Abstract: This empirical paper explores the link between remittance inflows and financial development in Ghana from 1980–2019. Empirical analyses are carried out using the ARDL VECM, DOLS, CCR and FMOLS techniques. Furthermore, the IRF and forecast FEVD analyses were employed to comprehend better financial development’s response to shocks to remittance inflows and other macroeconomic factors. The results demonstrate that the variables are cointegrated, and remittance was found to be beneficial to financial development in both the short and long run. Furthermore, from the IRF analysis, positive shocks to remittance have a favourable influence on financial development. The FEVD investigation suggests that shocks to migrant remittance accounted for almost 32% of the overall variations in financial development. The implication is that, from a policy perspective, well-structured strategies should be devised and executed to promote higher remittance flows via Kwadwo Boateng Prempeh ABOUT THE AUTHORS Kwadwo Boateng Prempeh is working as a senior lecturer in finance at Sunyani Technical University, Ghana. Dr. Prempeh is the Head of the Department of Procurement and Supply Chain Management, Faculty of Business and Management Studies. His main areas of research are finance, financial economics and enterprise development. Christian Kyeremeh is a senior lecturer in economics at Sunyani Technical University. His research interest focuses on economics, financial economics and enterprise development at the macro and micro level. Dr. Kyeremeh is currently the Dean of the Faculty of Business and Management Studies. Felix Danso holds an MBA. in Finance from Leicester University, England. His research interests are corporate governance, finance and monetary economics. Mr. Danso lectures at the Department of Accountancy, Faculty of Business and Management Studies, Sunyani Technical University, Ghana. PUBLIC INTEREST STATEMENT Remittances and Financial sector development are critical determinants of economic growth. Migrant remittances are money sent by migrants working overseas to their home countries, representing the most important external funding source for emerging economies. They play a significant role in financing productive investments and allow consumers to stabilise consumption. Though the effect of remittances and financial development on economic growth has been investigated in Ghana, little is known about how remittances affect financial development. The paper utilises time series data to examine whether financial development and remittances complement or substitute each other. We establish that remittances positively influence financial sector development in Ghana both in the short and long run. To say it differently, remittances complement financial development to boost economic growth. To this end, we suggest policy ramifications to promote the inflows of remittances through formal channels in Ghana and other emerging economies. Prempeh et al., Cogent Economics & Finance (2023), 11: 2237715 https://doi.org/10.1080/23322039.2023.2237715 Page 1 of 17 Received: 10 April 2023 Accepted: 13 July 2023 *Corresponding author: Kwadwo Boateng Prempeh, Faculty of Business and Management Studies, Sunyani Technical University Ghana, Sunyani, Ghana E-mail: [email protected] Reviewing editor: David McMillan, University of Stirling, UK Additional information is available at the end of the article © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent. official conduits. This will stimulate economic growth, financial development, and other monetary benefits of remittance inflows to the nation. Subjects: Sustainable Development; Economics; Finance Keywords: remittance inflows; financial development; Ghana; innovation accounting; ARDL JEL Classification: C32; F22; F37 1. Introduction In many emerging economies, migrant remittances are among the major external funding sources. They play a significant role in financing productive investments and allow consumers to stabilise consumption after economic shocks (Nanyiti & Sseruyange, 2022). Remittances are the second largest source of external financing, following foreign direct investment (FDI), and are seen as more stable than other overseas flows. This has motivated academics and decision-makers to examine how remittances impact several economic dimensions (Aggarwal et al., 2011; Coulibaly, 2015). For instance, some studies observed how remittances affected economic expansion (E. K. Chowdhury et al., 2022; Fayissa & Nsiah, 2010; Feeny et al., 2014; Goschin, 2014; Kumar, 2013; Kumar et al., 2018; Meyer & Shera, 2017; Sayantan, 2017; Sutradhar, 2020; Tahir et al., 2015), inflation (Narayan et al., 2011; Nisar & Tufail, 2013; Rivera & Tullao, 2020), poverty alleviation (Bang et al., 2022; Khan et al., 2022; Moniruzzaman, 2022; Saptono et al., 2022), energy usage (Rani et al., 2022; Sahoo & Sethi, 2022; Zafar et al., 2022; Zhang et al., 2022), income (Akçay, 2022; Basnet et al., 2022; Mishra et al., 2022), entrepreneurial activities (Alhassan, 2022; Nanyiti & Sseruyange, 2022; Yavuz & Bahadir, 2022), exchange rate (Chemseddin & Abdelkader, 2022; McFarlane, Brown, & Das, 2022), among others. These empirical papers reported that remittances promote economic expansion, aid in poverty reduction, promote energy usage, positively affect incomes of households and entrepreneurial activities, and mainly increase exchange rates confirming the Dutch disease and increasing inflation. Remittances’ effects on both emerging and industrialised nations’ financial sector development (FSD) have drawn much interest recently (Aggarwal et al., 2011; Akçay, 2020; Atem, 2022; Azizi, 2020; Bhattacharya et al., 2018; Bindu et al., 2022; Deheri, 2022; Fromentin & Leon, 2019; Hamma, 2017; Karikari et al., 2016; Keho, 2020; Mehta, Qamruzzaman, et al., 2021; Miao & Qamruzzaman, 2021; Prakash & Gounder, 2011; Shahzad et al., 2014; Tsaurai & Hlupo, 2019). It has become a topical subject in developing economies because FSD is critical in enhancing economic growth. By facilitating capital mobilisation and directing it to investments in the key sectors of the economy, remittances stimulate economic development. Bettin and Zazzaro (2012) and Peprah et al. (2019) recorded that remittance inflows support FSD in boosting economic growth in emerging nations. A developed financial sector tends to magnify the growth-enhancing effect of remittance inflows. However, as postulated by Aggarwal et al. (2011), when and how remittances impact FSD remains a priori ambiguous. Remittances are linked to the expansion of financial institutions since it serves as an avenue through which remittances are transferred (Fromentin, 2017). Even if not received via a formal institution, the beneficiaries of these remittances may need banking services that offer secure storage of these funds. When a person gets remittances via a formal entity, such as a bank, the likelihood of learning about and requesting further bank services increases. In addition, by offering remittance transfer services, banks can locate receivers with low financial intermediation. As demonstrated by Azizi (2020), for instance, an increase in remittances (% of GDP) is connected to an increase in bank deposits, which leads to a rise in domestic credit to the private sector and bank lending. However, remittances can ease a household’s financial constraint, which might cause credit to drop and harm credit market expansion (Nanyiti & Sseruyange, 2022). From a theoretical standpoint, the remittances-FSD nexus is grounded on two contradictory hypotheses, namely, substitutability and complementarity hypotheses. According to the substitutability hypothesis, remittances are an alternative to credit, easing individuals’/households’ Prempeh et al., Cogent Economics & Finance (2023), 11: 2237715 https://doi.org/10.1080/23322039.2023.2237715 Page 2 of 17 financial constraints. This may lower credit demand and impede credit market growth, particularly in recipient nations with weak financial systems (Bettin et al., 2017). On the other hand, the complementarity hypothesis suggests that remittances via the formal sector may stimulate financial development in underdeveloped nations since they serve as a major funding source. Empirical studies such as Akçay (2020), Deheri (2022), Azizi (2020), Aggarwal et al. (2011), M. B. Chowdhury (2011), Fromentin (2017), Bhattacharya et al. (2018) and Kakhkharov and Rohde (2020) lend support to the complementarity hypothesis. On the contrary, the works of Uddin and Sjö (2013), Bettin and Zazzaro (2012), Opperman and Adjasi (2019), Atem (2022), and Keho (2020) validated the substitutability hypothesis. Furthermore, the remittances-FSD nexus has been empirically examined for various nations and regions in the panel/pooled or time series framework. Most of these earlier studies demonstrated a beneficial effect of remittance inflows on FSD. For instance, Bindu et al. (2022), using yearly data from BRICS nations, discovered that remittances considerably influenced financial development. Similarly, Fromentin and Leon (2019), using a panel of 30 developing nations, reported a significant effect of remittances on FSD. Utilising a panel of 50 African countries and three measures of FSD, Karikari et al. (2016) established that remittances greatly boost some aspects of FSD; likewise, the receipts of remittances are facilitated by an advanced financial system. Tsaurai and Hlupo (2019) revealed that for 19 transitional markets, remittances have a neutral impact on FSD regardless of the measure of FSD. Aggarwal et al. (2011), employing a sample of 109 emerging economies from 1975 to 2007, found a substantial positive correlation between remittances and FSD. With the aid of a panel of the 57 nations that receive the most remittances and a dynamic system-generalised approach of moments, Bhattacharya et al. (2018) found a considerable positive connection between remittances and FSD. However, the magnitude of the impact was lower for developing economies than developed ones. According to Cooray (2012), remittances support FSD in nations where state ownership of banks is low and promote efficiency in nations where state ownership of banks is high. Fromentin (2017, 2018) recorded a positive nexus between remittances and financial development in developing countries, Latin America and Caribbean countries. Williams (2016), using the Generalised Method of Moments (GMM) estimator, reported that remittances spur financial development in some selected Sub-Saharan African (SSA) countries. However, a study conducted by Coulibaly (2015) failed to provide robust evidence that remittances promote FSD in SSA countries, as the results varied according to the country or measure of FSD employed, unlike Donou-Adonsou and Sylwester (2016). Shahzad et al. (2014) found that remittance inflows significantly impact FSD in South Asia. In analysing 24 developing countries using data from 1990– 2015, Azizi (2020) documented a favourable impact of remittances on FSD. Focusing on time series studies, Deheri (2022) found that in the long run, remittances positively affect FSD in India. On the contrary, in the case of Kenya, Atem (2022) reported that remittances hurt FSD, which contradicts the findings of Misati et al. (2019), who found that remittances promote FSD in Kenya. This may result from the various measurements of FSD used in their investigations and the time under consideration. Furthermore, Akçay (2020) established a nonlinear relationship between remittances and FSD, confirming the complementarity hypothesis in the case of Bangladesh. This agrees with the observations of M. B. Chowdhury (2011), which documented that remittance promotes FSD in Bangladesh. Deonanan et al. (2020) found that in Jamaica, remittances foster FSD in the long run while substituting it in the short run. Additionally, these studies utilised various time series techniques to investigate the remittance—FSD nexus. These include the Autoregressive Distributed Lag (ARDL) approach (Akçay, 2020; Atem, 2022; Deheri, 2022; Deonanan et al., 2020; Misati et al., 2019; Prakash & Gounder, 2011), the Vector Error Correction model (VECM) (M. B. Chowdhury, 2011; Deheri, 2022; Sibindi, 2014) and Nonlinear ARDL (Mehta, Serfraz, et al., 2021). Along with remittances, other critical determinants, such as economic growth, finance and trade liberalisation, may stimulate the FSD of a nation. Therefore, the exact nexus between economic growth and FSD remains unclear. Nevertheless, a well-functioning financial system supports Prempeh et al., Cogent Economics & Finance (2023), 11: 2237715 https://doi.org/10.1080/23322039.2023.2237715 Page 3 of 17 economic expansion by mobilising financial resources and channelling them into productive investments (Levine, 1997; Schumpeter, 1911). The path of causation between finance and growth is theoretically classified into four major phenomena: the finance-led growth hypothesis, the growth-led finance hypothesis, the feedback hypothesis, and the neutrality view (Nyasha & Odhiambo, 2018). Recent studies such as Deheri (2022) and Misati et al. (2019) have demonstrated that economic expansion fosters FSD. Regarding the influence of financial and trade openness on FSD, research shows that financial and trade openness enhances the availability of outside funding and encourages the use of financial services and institutions, hence promoting financial deepening (Mishkin, 2009; Rajan & Zingales, 2003). However, trade and financial openness make the domestic system susceptible to external shocks, thereby increasing capital market imperfections and volatility that may harm FSD. Studies such as Deheri (2022), Akçay (2020), and Baltagi et al. (2009) have documented the critical role trade and financial openness play in the FSD. Against this backdrop, we aim to investigate the short and long-term influence of remittances on Ghana’s FSD. Ghana was chosen for our investigation because the nation has experienced significant remittance inflows in recent years. Ghana was recognised as the second largest recipient of remittances in Sub-Saharan Africa after Nigeria in 2021, with a total value of around $4.5 billion (Benson, 2022). Remittance inflows contribute significantly to GDP (about 5.9% in 2021 (Sasu, 2022), which is vital for funding current account deficits. Concerning sources, about 68% of the remittance inflows to Ghana are from the USA, Nigeria, the UK, Italy and Germany (RemitScope, 2020). The Ghanaian government intends to reach its Sustainable Development Goals (SDGs) and Ghana Beyond Aid (GBA) targets by 2030. In this situation, greater financial development is necessary to achieve these targets. As stated, remittances transferred via formal channels may foster financial development. Moreover, if appropriately mobilised and steered towards productive investment, remittances may promote economic growth and augment the development impacts that are sorely needed in a developing nation like Ghana. Nevertheless, if remittances serve as alternatives for financial development, the effect may be detrimental. Thus, it is crucial to determine if remittances stimulate or inhibit financial development in Ghana. This study offers three contributions. First, as far as the authors are aware, this study is the first to examine how overseas remittances influence FSD in Ghana at the distinct national level. Secondly, prior research on the subject mainly employed numerous proxies of FSD, such as bank deposits (%GDP), domestic credit (%GDP), broad money (%GDP), market capitalisation (%GDP) and liquid liabilities (%GDP) (see, e.g., (Bhattacharya et al., 2018; R. P. C. Brown et al., 2013; DonouAdonsou et al., 2020; Karikari et al., 2016; Keho, 2020; Misati et al., 2019; Williams, 2016)). However, FSD is multifaceted, and measuring it with any of the variables mentioned may exclude other crucial dimensions. We used an index of FSD created by Svirydzenka (2016) to address this issue. The index reflects the overall FSD, including access, efficiency, and depth of the financial institutions and market. Lastly, several cointegration tests were used to examine the long-run association among the variables. The Granger causality test and innovative accounting are also used to determine the dynamic connection between the variables. Our findings suggest that remittance inflows positively influence FSD in Ghana in the long and short run. The remainder of the paper is structured as follows. Remittances and FSD movements in Ghana are covered in the section that follows. Section 3 provides an overview of the data and methods. Section 4 analyses and discusses the findings. The conclusion and ramifications for policy are found in Section 5. 2. Trends in financial sector development and remittance inflow in Ghana Figure 1 depicts the trends in financial sector development and remittances inflows (% GDP) spanning 1980 to 2019. Remittance inflows to Ghana have risen from 0.02% of GDP in 1980 to approximately 6% in 2019. Migrant remittances continued to rise steadily from the commencement of the study period to 2010, from 0.42% of GDP to 5.43% in 2011. Remittance inflows (% GDP) peaked at 10.04% in 2015, which declined to 5.31% in 2016. However, from 2016 it Prempeh et al., Cogent Economics & Finance (2023), 11: 2237715 https://doi.org/10.1080/23322039.2023.2237715 Page 4 of 17 experienced considerable increases up to 2019. On the other hand, financial sector development exhibited a decreasing trend up to 1984. Developing countries, especially Ghana, experienced a major banking crisis in the eighties. Many reasons were assigned to this phenomenon; almost 30% were related to non-performing loans (NPLs) within the economy’s private sector. To make the financial sector effective and efficient, the sector has undergone many financial restructuring and transformations. Establishing a market-oriented financial sector was the goal of the Comprehensive Economic Adjustment Program (CEAP) of 1983, the Financial Sector Adjustment Program (FINSAP) of 1988, financial deregulation in 1990, and the adoption of the universal banking system during the first quarter of 2003. Universal banking allowed banks to engage in merchant, commercial, investment and development banking without obtaining separate licenses. The deregulated environment and the relatively stable macroeconomic environment saw the influx of both foreign and local banks. This development also led to a massive expansion of the banking sector and intense competition. In addition, the FINSAP encouraged banking sector reforms and paved the way for creating a capital market. Establishing a capital market became inevitable towards the end of the FINSAP-1, which covered 1988–1999 since many state-owned enterprises were being divested. Consequently, financial sector development regained impetus and has been steadily increasing since 1985, albeit with occasional fluctuations until the end of the sampled period. The correlation coefficient between financial sector development and remittance inflows is 0.76, indicating a favourable interaction between the two variables. The scatter plots further support this, as shown in Figure 2. 3. Data and methodology 3.1. Data The primary purpose of this paper is to determine whether personal remittances received in Ghana spurred FSD from 1980 to 2019. Data availability dictated the choice of the study period. In sync with previous studies, we employ the FSD index constructed by Svirydzenka (2016), which captures the aggregate development of the financial sector (Deheri, 2022; McFarlane, Brown, Campbell, et al., 2022) as a measure of the financial sector development. We measured remittance by personal remittances received (% GDP) (Atem, 2022; Bindu et al., 2022; Deheri, 2022; Karikari et al., 2016; Miao & Qamruzzaman, 2021; Rehman et al., 2021). The paper uses control variables such as economic growth, which is proxied by Per capita GDP (constant 2015 US$) (Aggarwal et al., 2006; Bindu et al., 2022; R. P. C. Brown et al., 2013; Deheri, 2022; Karikari et al., 2016; Miao & Qamruzzaman, 2021; Rehman et al., 2021), financial openness measured by net direct investment inflows (% GDP) (Deheri, 2022; Karikari et al., 2016; Keho, 2020; Olayungbo & Quadri, 2019; Tsaurai & Hlupo, 2019) and trade (% of GDP) as a measure of trade openness (Bindu et al., 2022; R. P. C. Brown et al., 2013; Deheri, 2022; Olayungbo & Quadri, 2019). The FSD index was the only variable for which data were not obtained from the WDI database. The index of FSD was obtained from the IMF database. Figure 3 depicts the graphic representations of the series exhibiting their Figure 1. Trends of remittance inflows and financial development. Source: IMF, WDI databases and author’s estimation Prempeh et al., Cogent Economics & Finance (2023), 11: 2237715 https://doi.org/10.1080/23322039.2023.2237715 Page 5 of 17 actual behaviour. Table 1 also shows the rate at which the variables deviate from their respective means. All the variables are positively skewed except TOP. We observed that all variables have a platykurtic distribution except REM, which has leptokurtic distribution. The Jarque-Bera tests reveal that the variables are relatively normally distributed (p-value >0.05), apart from REM and EG (p-value <0.05). 3.2. Methodology To empirically investigate the long-run association and short-run dynamism between lnREM and lnFSD, we utilise the autoregressive distributed lag (ARDL) model suggested by Pesaran et al. (2001). The ARDL model performs better than conventional cointegration test models concerning small or finite samples. Additionally, regardless of the order of integration (i.e., I(0) and I(1)), the ARDL bounds testing technique enables evaluating cointegration between the outcome variable and its determinants. However, the technique cannot accommodate variable I(2). Lastly, the problems of endogeneity and serial correlation can be resolved by choosing the appropriate lags. The sample period in our study is relatively small, and there could be probable endogeneity in the Figure 2. Scatter diagram of the lower triangular matrix, histogram of regression line variables. Source: IMF, WDI databases and author’s estimation Figure 3. Plots of variables employed in the analysis. Source: IMF, WDI databases and author’s estimation Prempeh et al., Cogent Economics & Finance (2023), 11: 2237715 https://doi.org/10.1080/23322039.2023.2237715 Page 6 of 17 model, hence our choice of the ARDL model. In sync with earlier studies on the association between REM and FSD (Aggarwal et al., 2006; Akçay, 2020; Bhattacharya et al., 2018; Bindu et al., 2022; Deheri, 2022; Karikari et al., 2016; Mehta, Serfraz, et al., 2021; Prakash, 2008; Sobiech, 2019) and determinants of FSD (see, among others (Baltagi et al., 2009; Law & Habibullah, 2009; Mishkin, 2009; Rajan & Zingales, 1998)), to reflect the dynamic impact of lnREM, lnEG, lnFDI, and lnTOP on lnFSD, we propose the empirical model. Where FSD denotes financial sector development, REM represents personal remittances, the main variable of interest. EG, FDI and TOP represent economic growth, foreign direct investment and trade openness, which are critical determinants of FSD. All the variables are expressed in their natural log (ln) form. εt is the stochastic error term. A priori lnREM (α1) can positively (+) or negatively (-) influence lnFSD. lnREM is anticipated to boost finance industry efficiency. However, it is noted that REM data employed in most studies (with this paper being no exception) is limited as it does not give the exact volume of the remittance movements, given that substantial volumes of REM are transmitted through informal channels. According to Taylor and Castelhano (2016), approximately 50% of REM are under recorded as they are conveyed through informal channels. lnEG (α2Þis expected to promote (+) lnFSD. lnFDI and lnTOP (α3andα4) can positively (+) or negatively (-) influence lnFSD. Based on Model 1, we specify the ARDL model as follows: Model 2 captures the shortand long-run dynamics of the REM-FSD link. The coefficient α0 is the deterministic component, ∆ is the symbol for first difference, and n is the lag length of the corresponding variables. The parameters ψ0, . . . ψ4 capture the long-run associations while Φ0 . . . Φ4 represent the short-run parameters. The bound testing method for evaluating cointegration entails evaluating the H 0: ψ0¼ψ1¼ψ2¼ψ3¼ψ4¼0 against the H 1: ψ0�ψ1�ψ2�ψ3�ψ4�0 using the F-test. H 0 is rejected if the estimated F-statistic exceeds the I(1) of the selected significance level. We fail to reject the null hypothesis whenever the estimated F-value is smaller than I(0). However, the conclusion is equivocal if the F-statistic lies between I(0) and I(1) (Pesaran et al., Table 1. Descriptive statistics of series FSD REM EG FDI TOP Mean 0.10 1.50 1187.17 3.02 62.80 Median 0.10 0.41 1034.51 1.76 66.90 Maximum 0.15 10.08 2053.59 9.47 116.05 Minimum 0.06 0.01 757.92 0.05 6.32 Std. Dev. 0.02 2.38 377.37 2.94 28.06 Skewness 0.24 1.87 0.95 0.74 −.29 Kurtosis 2.46 5.79 2.54 2.25 2.43 Jarque-Bera 0.87 36.40 6.32 4.58 1.11 Probability 0.65 0.00 0.04 0.10 .57 Observations 40 40 40 40 40 Source: The authors Prempeh et al., Cogent Economics & Finance (2023), 11: 2237715 https://doi.org/10.1080/23322039.2023.2237715 Page 7 of 17 Kyeremeh & Felix Kwabena Danso, Cogent Economics & Finance (2023), 11: 2237715. Note 1. Data on average transaction cost of sending remittance to a specific country is available at https://data. worldbank.org/indicator/SI.RMT.COST.IB.ZS References Abeka, M. J., Gatsi, J. G., Appiah, M. O., & Agyemang, O. S. (2022). Trade openness and financial development in sub-Saharan Africa: The role of institutional structures. Thunderbird International Business Review, 64(1), 67–80. https://doi.org/10.1002/tie. 22241 Aggarwal, R., Demirgüç-Kunt, A., & Pería, M. S. M. (2011). Do remittances promote financial development? 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