Moderating Effect of Interest Rates in Comesa Countries
- October 29, 2019
- Posted by: RSIS
- Categories: IJRISS, Social Science
International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue X, October 2019 | ISSN 2454–6186
Moderating Effect of Interest Rates in Comesa Counties
Stephen Angwenyi Nyamweya, Dr. Josephat Cheboi, David Kosgei
Department of Accounting and Finance, Moi University, Kenya
Abstract:-The paper sought to determine the moderating effect of interest rate on the linkage between financial factors and financial development in 19 COMESA Countries. The specific objectives were to determine the moderating effect of interest rates on the relationship between international remittance, financial access and the financial development in COMESA countries. The results indicated that interest rate moderated positively the relationship between international remittance and financial development (β=0.0217,p-value=0.0074). Further, interest rate showed a significant moderating effect on the relationship between financial access and the financial development with coefficient 0.0046(p-value=0.0009). Therefore, results are expected to provide a basis for policy reference and also stimulate debate ondiaspora policies on interest rates in developing countries especially COMESA regionsto encourage foreign remittances, financial access and thereby fostering financial development.
I. BACKGROUND OF THE STUDY
International remittances are measured in terms of total deposits and credit as well as % percent of GDP. International remittances are the second largest source of finance after FDI and there has been continuous increase inflow in the last three decades and this is an important input in national economic development as indicated by World Bank report (2016). Bhattacharya et al., (2018) indicated that financial globalization has given rise to the improvement of financial by increasing access to funds and also improving financial infrastructure in the developing countries. Money is transmitted into the developing countries through operators such as Western Union and Money Gram and also with other domestic and foreign financial institutions. Developing countries are integrated into global financials where more capital flows into these countries. Aggarwat, et al., (2010), point out that poor Countries received larger international remittances as compared to the developed Countries.
