Impact of Remittances Inflow on Financial Development of Pakistan Empirical Evidence from Top Eight Sources Countries

Abstract

The current research work evaluate the impact of progressively growing remittance inflow to Pakistan on its financial development from top source countries where its maximum immigrants are working there and sending remittances to their households in their domicile countries .this study only includes the sample of only eight source countries ,as behind the reason is that the inflow from these nations is in billions every year which are comparatively very financial inflows as compared to other countries whom having outflow towards Pakistan is in lakh or just in thousand. Therefore the current study in this way contribute to previous literature by allowing for assessment of remittance inflow from explicit group of countries .For assessment of impact over financial development the study utilize the data collected over the period of 1989 to 2016 for nine countries taking in eight countries as source country and one is remittances recipient moreover this study employ the four indicator for measuring financial development in Pakistan among which the three proxy for development of financial intermediaries and one indicator measure the development of stock market .after fixed effect model and random effect model were used to measure the overall impact and also the hausrnan test employment indicated the fixed effect model as appropriate model for empirical analysis of proposed model .The results posits advocacy for stability of remittance inflow and conclude the positive and significant impact on financial development of Pakistan.