Effects of political instability on migrant remittances in Sub-Saharan African countries: role of financial development

This article analyses the effects of political instability on migrant remittances in 35 Sub-Saharan African (SSA) countries over the period 2006–2023, examining the role of financial development. A finite mixture model (FMM) estimated using instrumental variables (IVs) is adopted to account for country heterogeneity and correct for endogeneity. The results reveal that the effects of political instability on migrant remittances differ between two distinct groups of countries. Political instability has no significant effect on migrant remittances in the first group, whereas in the second group, it increases remittances. The first group comprises countries in which migrant remittances are not affected by political instability. The second group consists of countries where political instability leads to a significant increase in these transfers. Furthermore, countries with a high level of financial development are more likely to belong to the group where political instability increases migrant remittances. Therefore, the results suggest that SSA countries should develop their financial sectors to encourage large-scale migrant remittances in contexts of political instability.