Financial progress, inward remittances, and economic growth in Bangladesh: Is the nexus asymmetric?

Abstract

Prior studies in Bangladesh examined the effects of financial progress and inward remittances on economic growth and postulated a symmetrical relationship, ignoring the potential asymmetrical relationship between variables. Therefore, this study intends to explore the asymmetrical effects of financial progress and remittances on economic growth in Bangladesh. The study used yearly time series data from 1988 to 2020 and employed the Nonlinear Autoregressive Distributed Lag (NARDL) model. Our study confirmed the asymmetrical effects of financial progress and remittances on economic growth and revealed a long-run association between the variables being studied. The study's novelties are that both positive and negative fluctuations in financial progress and remittances boost Bangladesh's economic growth. Thus, it is essential to enact policies that support financial progress by ensuring sustainable development in financial institutions and financial markets. In addition, remittances should be employed for productive purposes rather than only for consumption to improve the country's economic backbone.

Keywords

• Asymmetric relationship
• Financial progress
• Remittances
• Economic growth
• NARDL
• Bangladesh