IMPACT OF REMITTANCES ON HOUSEHOLD FINANCES AND ECONOMIC DEVELOPMENT IN NEPAL

Abstract

This study examines the impact of remittances on household finances and economic development in Nepal, focusing on three key variables: remittance inflow (RI), household consumption (HC), and per capita income (PCI), with Gross Domestic Product (GDP) as the dependent variable. Utilizing a descriptive and causal-comparative research design, the study analyzes data from 2013/14 to 2022/23, sourced from the Nepal Rastra Bank (NRB), Central Bureau of Statistics (CBS), and other reports. Descriptive statistics reveal mean values of 1.9940 for LnRI, 7.8088 for LnHC, 6.9398 for LnPCI, and 3.3839 for LnGDP, with variability indicating more fluctuation in household consumption. Correlation analysis shows strong and statistically significant relationships between remittance inflow, household consumption, per capita income, and GDP, highlighting their importance in driving economic growth. However, regression analysis finds that per capita income has a significant positive impact on GDP, while remittance inflow and household consumption do not exhibit statistically robust effects. This suggests that while remittances and consumption contribute to household welfare, per capita income is the most critical factor influencing GDP.