Remittances and Financial Institutions: Is there a causal linkage?
Remittance inflows from developed to developing countries provide liquidity
for domestic financial institutions, which aids in the development process.
Author/s: Posso, Alberto
Publication: The B.E. Journal of Macroeconomics
This paper tests whether the reverse effect has been neglected and whether more financial services and opportunities in the home country attract remittances to developing countries using data from 72 economies. Remittance inflows are driven by increased availability of domestic financial services, particularly the presence of microfinance institutions. These findings, perhaps, suggest that remittance-sending migrants may not be altruistic and send remittances to maximize their own future income.