Left Behind, but Included: The Case of Migrant Remittances and Financial Inclusion in Ghana

Migration is often viewed negatively because of the homelessness, city congestion, and other ills it has often been tagged with. But, ‘Every coin has a flipside’. Using data from the Ghana Living Standard Survey (Round 6), this study explores how remittances sent by migrants promote access to and usage of a broad range of financial services. We employ a novel econometric methodology, the endogenous switching probit regression which effectively handles selection on observables and unobservables as well as endogeneity. Treatment effect predictions show that remittances increase the probability of receiving households owning an account, saving, accessing credit and holding insurance policy by 14 percentage point, 8 percentage point, 4 percentage point and 11 percentage point respectively compared to analogous non-receiving households. Remittances confer similar financial inclusion benefits on a randomly selected household and on the counterfactual –the financial inclusion level of those households that did not receive remittances had they received remittances. This implies that remittances foster financial inclusion of the left behinds. This unambiguous impact of remittances on financial inclusion calls for a more balanced view by policy makers and other stakeholders regarding both internal and external migration.