Financial development, trade, remittances, and economic growth: The governance perspective

This study examines the governance perspective of Zimbabwe’s financial development, trade, remittances, and economic growth. The study utilises time-series data from the World Bank Worldwide Development Indicators (WDI) database from 1980 to 2022. Vector autoregression (VAR) models were estimated to analyse “short-run” relationships among the four variables. The results obtained showed the non-existence of cointegration equations in the series. The significant findings are the positive “short-run” causal effects of first lag gross domestic product (GDP) regressor on GDP at 0.05%, first lag remittances regressor on GDP, first lag financial development regressor on financial development, and first lag trade and remittances regressors on remittances, at 0.01% level of significance. Moreover, the Granger causality test showed that the remittances Granger causes GDP and trade Granger causes remittances in the “short-run”, while the opposite is true for other variables. This study is essential for governance, regulation, researchers, and policymakers. The government should develop strategies that encourage the increase of remittances, trade, and financial progress to facilitate substantial economic advancement.