Finance and Economic Growth in Nigeria: Further Evidence from Diasporal Remittance

Authors: Erhabor, Osaruyi Jeffrey Ph.D & Okoh, Osarhemen Macdonald Ph.D

Affiliation: Department of Banking and Finance, Ambrose Alli University, Ekpoma

Corresponding Author: [email protected]

December 18, 2025

SIAR-Global Journal of Management & Business Review

DOI: 10.5281/zenodo.17979097

Finance and Economic Growth in Nigeria: Further Evidence from Diasporal Remittance

Research Article Business

Abstract

This study investigates the relationship between financial inflows and economic growth in Nigeria, with a particular focus on diaspora remittances as a complementary and sustainable source of development finance. Traditional external financial flows such as foreign direct investment (FDI) and official development assistance (ODA) have often proved insufficient or inconsistent due to global economic fluctuations, political conditions, and structural limitations. In contrast, remittance inflows have grown steadily over the study period, suggesting potential for stimulating economic growth. The study examines the contribution of remittances to real GDP growth, alongside bank credit, FDI, ODA, exchange rate movements, and inflation, using annual data spanning ten years. Descriptive statistics revealed consistent growth in remittance inflows, while FDI and ODA showed volatility over the period. Correlation analysis indicated a positive relationship between remittances and GDP growth (r = 0.62), indicating a moderately strong association, whereas inflation and exchange rate volatility were negatively correlated with growth (r = -0.41 and -0.35, respectively). Ordinary Least Squares (OLS) regression analysis further quantified these effects, showing that a 1% increase in remittances is associated with an average 0.28% increase in GDP, holding other factors constant. Bank credit contributed positively, especially when directed toward productive sectors, while FDI exhibited a statistically insignificant effect due to short-term portfolio investments. Inflation and exchange rate volatility exerted statistically significant negative effects on economic growth. The findings highlight that diaspora remittances can serve as an effective growth driver if channeled into productive investments and integrated within the formal financial system. High transfer costs and limited financial sector efficiency reduce the developmental impact of these flows. The study therefore recommends policies to deepen financial inclusion, incentivize diaspora investment, stabilize macroeconomic conditions, improve transparency in ODA utilization, and attract sustainable FDI.

Keywords

Diaspora remittances, Economic growth, Bank credit, Foreign direct investment, Official development assistance, Exchange rate, Inflation, Nigeria.

Full Article

Download Full Article (PDF)

How to Cite

Erhabor, Osaruyi Jeffrey Ph.D & Okoh, Osarhemen Macdonald Ph.D (2025). Finance and Economic Growth in Nigeria: Further Evidence from Diasporal Remittance. SIAR-Global Journal of Management & Business Review, Vol. 1, No. 1. DOI: 10.5281/zenodo.17979097

Share This Article

Facebook LinkedIn

Finance and Economic Growth in Nigeria: Further Evidence from Diasporal Remittance

Abstract

Keywords

Full Article

How to Cite

Share This Article

Article Information

Related Articles

Industry Characteristics: Sustainability and Profitability in the Financial …

Millennium Development Goals (MDGs): Women Empowerment and Participation …

About This Journal

SIAR-Global Journal of Management & Business Review