Abstract
The extant literature indicates that remittance inflows from developed to developing countries provide liquidity for domestic financial institutions, which aids in the development process. However, the reverse effect has been neglected. This paper tests whether more financial services and opportunities in the home country attract remittances to developing countries. It addresses this hypothesis using a dataset of 72 developing countries over the period 1997–2011. The paper finds evidence that remittance inflows are driven by increased availability of domestic financial services. In particular, the presence of microfinance institutions is found to be a key driver in stimulating migrant remittances. These findings, perhaps, suggest that remittance-sending migrants may not be altruistic and send remittances to maximize their own future income. Alternatively, the results suggest that microfinance organizations have been successful in attracting remittances by lowering transaction costs and proving linked services.
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Articles in the same Issue
- Frontmatter
- Advances
- International specialization and the return to capital
- How the wage-education profile got more convex: evidence from Mexico
- Contributions
- Africa’s missed agricultural revolution: a quantitative study of the policy options
- Structural transformation and productivity in Latin America
- Public debt and growth in the euro area: evidence from parametric and nonparametric Granger causality
- Transition dynamics in the neoclassical growth model: the case of South Korea
- Household saving in Australia
- An ordered probit analysis of monetary policy inertia
- Fiscal shocks, the real exchange rate and the trade balance: some evidence for emerging economies
- Topics
- Remittances and financial institutions: is there a causal linkage?
- Club convergence in Latin America
Articles in the same Issue
- Frontmatter
- Advances
- International specialization and the return to capital
- How the wage-education profile got more convex: evidence from Mexico
- Contributions
- Africa’s missed agricultural revolution: a quantitative study of the policy options
- Structural transformation and productivity in Latin America
- Public debt and growth in the euro area: evidence from parametric and nonparametric Granger causality
- Transition dynamics in the neoclassical growth model: the case of South Korea
- Household saving in Australia
- An ordered probit analysis of monetary policy inertia
- Fiscal shocks, the real exchange rate and the trade balance: some evidence for emerging economies
- Topics
- Remittances and financial institutions: is there a causal linkage?
- Club convergence in Latin America