Title: Dynamic effects of foreign remittance volatility in low-income SADC countries

Authors: Kuziva Mamvura; Mabutho Sibanda; Rajendra Rajaram

Addresses: School of Accounting, Economics and Finance, University of Kwa Zulu Natal, Westville Campus, Durban, South Africa ' School of Accounting, Economics and Finance, University of Kwa Zulu Natal, Westville Campus, Durban, South Africa ' School of Accounting, Economics and Finance, University of Kwa Zulu Natal, Pietermaritzburg, South Africa

Abstract: This study investigates the impact of remittance volatility in low-income countries in the Southern African Development Community (SADC) bloc. Employing a panel vector autoregressive (P-VAR) model with quarterly data that spans 2000Q1 to 2019Q4, the findings reveal that global shocks are rapidly transmitted to the domestic economy and not vice versa. Shocks in remittance volatility significantly impact domestic interest rates and consumer prices. The study further reveals that net remittance volatility impacts positively on real gross domestic product (GDP) and money supply in these countries. Therefore, in order to achieve stable and constant remittance flows, policymakers should adopt effective programs that lead to financial growth, and price and interest rate stability to encourage remittances through formal channels. Given the scarcity of macro-financial studies on the region, this article provides meaningful empirical evidence on the dynamic effects of foreign remittance volatility in low-income SADC countries.

Keywords: foreign remittances; remittance volatility; dynamic effects; low-income SADC countries; panel-VAR.

DOI: 10.1504/AAJFA.2024.142116

Afro-Asian Journal of Finance and Accounting, 2024 Vol.14 No.6, pp.757 - 775

Received: 29 Mar 2022
Received in revised form: 06 Apr 2023
Accepted: 30 Jun 2023
Published online: 08 Oct 2024 *

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