FACULTY OF THE SOCIAL SCIENCES
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Item Remittances and Output Growth Volatility in Developing Countries: Does Financial Development Dampen or Magnify the Effects.(Springer-Verlag GmbH, 2019) Adeniyi, O. A.; Ajide, K.; Raheem, I. D.The paper empirically investigated the relationship between remittance flows and output growth volatility for an extensive sample predominated by emerging and developing countries. Following this broad treatment, it goes further to estimate the extent to which the degree of financial development (FD) impacts on the remittances– growth volatility nexus. This novelty distinguishes the work from previous studies. Using the system-generalized method of moments estimator, which corrects for endogenity and omitted variable concerns, on data spanning the period 1996–2012 for a total of 71 countries some interesting findings ensued. One, both remittances and FD had growth volatility dampening effects. Two, the interaction between proxies for FD and remittances produced mixed results. Three, when volatility of FD is accounted for, the interactive term had mixed results. For instance, banking sector credit produces positive and insignificant coefficients, while private sector produced significant and negative coefficients. Summarily putting these results in other words, the countercyclicality of remittances was established, while the complementary dampening effect of financial development is dependent upon its measure. On the basis of the foregoing, a few related policy lessons are documented to conclude the paper.Item The Role of Institutions in Output Growth Volatility- Financial Development Nexus: A Worldwide Study(Emerald Publishing Limited, 2016) Raheem, I. D.; Ajide, K.; Adeniyi, O. A.Purpose – The purpose of this paper is to investigate the role of institutions in the financial development-output growth volatility nexus. It provides new channels through which financial development can dampen the output growth volatilities of the countries under investigation. Design/methodology/approach – A comprehensive data set for 71 countries covering the period from 1996 to 2012 and the System GMM approach were used. The choice of the methodology is to deal with endogeneity issues such as measurement errors, reverse causality among other issues. Findings – A number of findings were emanated from the empirical analysis. First, the estimates provided evidence of the volatility-reducing effect of financial development. Second, institutions do not have the same reducing influence on output growth volatility. Third, the interaction of financial development and institutions showed that the output volatility reduction arising from financial development is enhanced in the presence of improved institutions. Research limitations/implications – The policy implications derived from this study are in twofolds: first, it is important for policymakers to formulate policies that would ensure and enhance the development of the financial sectors, since its importance in minimizing output volatility has been established. Second, institutional quality should be developed so as to further enhance the growth volatility-reducing influence of financial development. Particularly, institutions should be improved along the multiple dimensions captured in the analysis. Originality/value – To the best knowledge, the novelty of this study to the literature is the introduction of institutions, which is hypothesized to increase the dampening effects of financial development in output growth volatility.