The Impact of Workers’ Remittances on Financial Development in Sri Lanka

The purpose of the study was to investigate the relationship between workers’ remittances and financial development. The study employed annual time series data for Sri Lanka from 1977 to 2019, and the ARDL Cointegration technique was used to empirically estimate the dynamic relationship between workers’ remittances and financial development. The findings show that there is a statistically significant and positive relationship between both variables. The Granger causality test results indicate a unidirectional causality stemming from workers’ remittances to financial development. Remittance inflows are a source of foreign exchange, so policymakers should be assisted in developing and implementing appropriate policies.