Financial development, trade, remittances, and economic growth: The governance perspective

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Abstract

This study examines the governance perspective of Zimbabwe’s financial development, trade, remittances, and economic growth. The study utilises time-series data from the World Bank Worldwide Development Indicators (WDI) database from 1980 to 2022. Vector autoregression (VAR) models were estimated to analyse “short-run” relationships among the four variables. The results obtained showed the non-existence of cointegration equations in the series. The significant findings are the positive “short-run” causal effects of first lag gross domestic product (GDP) regressor on GDP at 0.05%, first lag remittances regressor on GDP, first lag financial development regressor on financial development, and first lag trade and remittances regressors on remittances, at 0.01% level of significance. Moreover, the Granger causality test showed that the remittances Granger causes GDP and trade Granger causes remittances in the “short-run”, while the opposite is true for other variables. This study is essential for governance, regulation, researchers, and policymakers. The government should develop strategies that encourage the increase of remittances, trade, and financial progress to facilitate substantial economic advancement.

Keywords: Financial Development, Trade, Foreign Remittances, Diaspora Remittances, Economic Growth, GDP, Zimbabwe

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: C58, F24, O11, O16, O47, P33, P34, P45

Received: 07.03.2024
Revised: 05.05.2024; 23.06.2024; 28.01.2025
Accepted: 06.02.2025
Published online: 10.02.2025

How to cite this paper: Maune, A. (2025). Financial development, trade, remittances, and economic growth: The governance perspective [Special issue]. Journal of Governance & Regulation, 14(1), 251–261. https://doi.org/10.22495/jgrv14i1siart2