الفهرس 
THEORITICAL FRAMEWORK AND LITERATURE REVIEWOnly 14 pages are availabe for public view
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Abstract
Workers’ remittances have attracted the attention of many researchers and policymakers since the 1970s due to their importance as a source of foreign currency as well as their stability compared to other financial and capital inflows such as foreign direct investment (FDI), tourism revenues, portfolio investments, and official development assistance (ODA). Accordingly, several researchers have attempted to investigate the developmental impact of remittances, focusing on economic growth and poverty reduction. However, remittances can stimulate economic growth and poverty reduction by increasing the recipient country’s per capita income. Besides, several researchers have tried to investigate the impact of remittance inflows on the recipient countries’ banking sector but there is a debate among researchers about whether workers’ remittances have a significant and positive impact on banking sector.
On the one hand, the inflow of remittances through a formal banking sector can increase the number of bank deposits, which increases the amount of credit available to the public and enables households to gain access to financial products and services offered by banks. On the other hand, the inflow of remittances through informal ways such as sending remittances with relatives and friends can negatively affect banking sector. Moreover, the use of remittances as a substitute for loans provided by banks and the direction of these funds towards consumption and other investments rather than savings in banks can also affect the banking sector negatively.
Given the debate among scholars about the influence of remittances on the banking sector and the lack of studies applied to Egypt to determine the kind of this relationship, this thesis aims to analyse the impact of workers’ remittances on the performance of the Egyptian banking sector. This study depends on the ARDL econometric technique based on quarterly data from 2006 to 2019 to determine to what extent workers’ transfers affect the banking sector’s performance. However, this study employs three multiple linear regression models to achieve the study objectives. The first model adapts non-governmental foreign currency deposits as a dependent variable, while the second model adapts non-governmental foreign currency credit, and the third model adapts return on assets (ROA).
The empirical results indicate that workers’ remittances have a positive and statistically significant impact on the Egyptian banking sector intermediation functions in the short run but have an insignificant impact on non-governmental foreign currency deposits in the long run. Nevertheless, the first lag of workers’ remittances has a negative and statistically significant impact on non-governmental foreign currency credit. This means that a rise in remittance inflows initially increases the number of foreign currency deposits, which increases the number of loans provided by banks. After a while, remittance recipients withdraw their funds from banks and use them as a substitute for formal loans to fulfil their consumption and investment need, resulting in a decline in the volume of foreign currency deposits in the Egyptian banks, as well as a decline in the number of loans provided by banks. On the other hand, the coefficient of remittances in the third model implies that the impact of workers’ transfers on return on assets (ROA) is negligible compared to the huge number of remittances inflowed to Egypt.
FDI inflows have an insignificant impact on the intermediation functions of the Egyptian banking sector, while trade openness has a positive and statistically significant impact on these functions. Nonetheless, the coefficient of trade openness has a negative and statistically significant impact on the return on assets (ROA). However, the inflation rate has an insignificant impact on the intermediation functions of the Egyptian banking sector, but the first lag of inflation has a negative and statistically significant effect on non-governmental foreign currency deposits. On the other hand, the coefficient of inflation has a positive and statistically significant impact on the return on assets (ROA), but the first lag of the inflation rate has a negative and statistically significant impact on the return on assets (ROA) after three months.
The foreign exchange growth rate has a direct and significant impact on non-governmental foreign currency deposits in the long run but has an insignificant impact on foreign currency deposits in the short run. Moreover, the deposit interest rate has an insignificant impact on non-governmental foreign currency deposits in Egyptian banks. Furthermore, loans interest rate has an insignificant impact on return on assets (ROA).
Finally, this thesis recommends that the central bank of Egypt, the Egyptian government, and the Egyptian banks should take actions to increase the volume of remittances through formal banking sector and to deal with the obstacles that face Egyptian emigrants in Arab and West countries. For example, opening bank branches in destination countries in which Egyptians are highly concentrated, organising seminars and orientations to Egyptian emigrants about the challenges that they may face abroad, and adjusting the deposit interest rate on long-term foreign currency deposits to encourage Egyptians abroad to save their funds in banks rather than withdrawing money and directing it towards consumption or other types of investments, this action can leads to an increase in the amount of credit available to public