Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323491 
Year of Publication: 
2025
Citation: 
[Journal:] Contemporary Economics [ISSN:] 2300-8814 [Volume:] 19 [Issue:] 2 [Year:] 2025 [Pages:] 208-229
Publisher: 
VIZJA University, Warsaw
Abstract: 
This study investigates the relationships between remittances, financial development, and economic growth in Western Balkan countries during 2002-2022. Employing a dynamic panel data approach, the research encompasses a multi-faceted regression strategy, including Ordinary Least Squares (OLS), Fixed Effects, and Two-Stage Least Squares (2SLS) models. This approach is particularly designed to address potential endogeneity issues in remittances and financial development indicators. The analysis reveals that remittances have been a significant growth driver in the Western Balkans, with their impact being more pronounced in countries with less developed financial systems. This finding suggests a substitutive relationship between remittances and financial development. The study also indicates that financial development, measured through Money Supply and Net Interest Margin, has a complex and unclear impact on economic growth. The interaction between remittances and financial development is also a focal point, with significant negative coefficients indicating that in regions with limited financial development, remittances play a crucial role in filling the gaps left by inefficient financial markets. The study contributes to the understanding of how remittances and financial development interact and influence economic growth, providing valuable insights for policy formulation in the Western Balkans.
Subjects: 
remittances
financial development
economic growth
Panel Data
JEL: 
F24
F43
O16
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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