DO INSTITUTIONAL QUALITY, FINANCIAL DEVELOPMENT, AND MIGRANT WORKERS’ REMITTANCES IMPROVE CURRENT ACCOUNT BALANCE? EVIDENCE FROM MENA COUNTRIES
DO INSTITUTIONAL QUALITY, FINANCIAL DEVELOPMENT, AND MIGRANT WORKERS’ REMITTANCES IMPROVE CURRENT ACCOUNT BALANCE? EVIDENCE FROM MENA COUNTRIES

Summary/Abstract: This article examines the relationship between the current account, workers' remittances, and financial development while taking into Institutional quality in 14 countries in the Middle East and North Africa (MENA) region over the period 1995-2020, using nonlinear autoregressive distributed lag (NARDL). By applying the index of political stability and absence of violence/terrorism as a measure of the Institutional environment and two indicators representing financial development, we found that financial development has a significant positive effect on the current account. This clearly reveals the complementarity between financial development and remittances to stimulate the current account balance. Furthermore, we highlight that the variable measuring political stability is negatively related to the current account balance, which implies that an increase in political Instability increases remittances inflows for the specific case of MENA countries. These results suggest an altruistic motivation for the MENA migrant's decision to transfer.

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