This paper investigates the impact of remittances on financial development in 44 African countries over six time periods, composed of five-year averages from 1975 to 2004. The authors find that remittances promote financial deepening in sub-Saharan Africa, after controlling for macroeconomic and institutional variables that are commonly used to explain financial development in low-income countries. These results are robust to accounting for the possibility that reported remittances are likely to be higher in better-developed financial markets.
