THE COMBINED EFFECT OF REMITTANCES AND FINANCIAL DEVELOPMENT ON POVERTY REDUCTION IN NIGERIA
Mathias Mathew Madu, PhD
Volume 6 Issue 1
Abstract
Remittances through efficient financial institutions have been identified as a potential source of income and a means of reducing poverty in developing countries like Nigeria. Using annual time-series data from 1981 to 2025, this study examined the relationship between remittances, financial development and poverty in Nigeria, controlling for other relevant factors such as inflation rate. The study employed household consumption expenditure to capture poverty in its multidimensional form. Based on the stationarity test results, the autoregressive distributed lag (ARDL) bounds-cointegration technique was employed to estimate the specified models. The long-run result shows that the interactive relationship between remittances and financial development impacted significantly on poverty (when household consumption expenditure was used) in both long and short-run. The finding also implies that household consumption expenditure is an appropriate measure of poverty in Nigeria. The study, therefore, concludes that remittances and financial development effectively play a role in poverty reduction in Nigeria during the study period. It suggests that remittances from migrant workers should be sent through a sound, efficient financial system that allows tracking, and that the cost of sending remittances should be reduced. Households should also be encouraged to have access to financial institutions. Keywords: Remittances, Financial Development, Poverty and ARDL
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