Impact on Foreign Remittances and Bank Deposits in Digital Era of Pakistan: The Moderating Role of Blockchain Technology

Abstract

This study addresses the critical issue of how foreign remittances impact bank deposits in Pakistan, with a particular focus on the moderating role of blockchain technology. Employing Structural Equation Modeling (SEM), the research analysed responses from a diverse group comprising remittance recipients, banking professionals, and fintech experts. The findings substantiate two main hypotheses: First, there exists a significant positive relationship between foreign remittances and bank deposit levels in Pakistan (H1), underscoring the pivotal role of remittances in bolstering the country’s banking sector. Second, blockchain technology acts as a positive moderator in this relationship (H2), indicating that the integration of this technology in banking operations can enhance the benefits of remittance inflows. These insights carry profound implications. For H1, they suggest that maximising remittance inflows is a viable strategy for strengthening bank deposits. For H2, the findings highlight the potential of blockchain technology in revolutionising banking practices, particularly in the management of remittances. The study makes significant contributions to the understanding of financial dynamics in developing economies. It offers empirical evidence on the link between remittances and bank deposits and introduces a new perspective on the role of blockchain technology. For policymakers, the research emphasises the need for regulatory frameworks that facilitate blockchain integration in financial systems. For banking institutions, it underscores the importance of adopting blockchain to capitalise on the economic benefits of remittances, providing a roadmap for enhancing financial stability and growth in Pakistan.