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Open Access Knowledge and Scholarship

Date of Award

5-2026

Culminating Project Type

Starred Paper

Styleguide

apa

Degree Name

Applied Economics: M.S.

Department

Economics

College

School of Public Affairs

First Advisor

Artatrana Ratha

Second Advisor

Kenneth Rebeck

Third Advisor

Mana Komai-Molle

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Keywords and Subject Headings

Remittances, Financial Development, Inflation, Developing Countries

Abstract

This study examines the relationship among investment, remittances, and financial development in five developing countries between 1993 and 2024: Bangladesh, Egypt, Nepal, Pakistan, and the Philippines. The analysis examines both short-run and long-run dynamics among the variables using a panel Autoregressive Distributed Lag (ARDL) approach. The results show that the most consistent and significant factor influencing investment is financial development, as determined by domestic credit to the private sector. Additionally, GDP per capita generally exhibits a positive impact, especially in the long run. Remittances, on the other hand, have mixed effects across countries. Remittances seem to encourage consumption rather than profitable investment in some situations, but their impact is not statistically significant in others. Investment is not consistently or significantly impacted by inflation. A long-run relationship between the variables is confirmed by the Pedroni cointegration test. Despite being negative as predicted, the lagged error correction term is not statistically significant, indicating a relatively slow rate of adjustment toward equilibrium. The effects of financial development and remittances are not consistent across economies, as evidenced by country-specific results. Overall, the results indicate that income and financial development are important factors that influence investment, with remittances playing a different role depending on the circumstances of each country. These findings emphasize the significance of strengthening financial systems and encouraging developing countries to make effective use of remittance inflows.

Comments/Acknowledgements

I want to express my sincere gratitude to my advisor, Dr. Artatrana Ratha, for his guidance, support, and valuable feedback throughout this study. I also thank my committee members, Dr. Kenneth Rebeck and Dr. Mana Komai-Molle, for their insightful comments and suggestions. I am grateful to Saint Cloud State University for providing the academic environment and resources necessary to complete this research.

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