Do transfer costs matter for foreign remittances?
Using bilateral data on remittance flows to Pakistan for 23 major host countries, this is the first study that examines the effect of transaction costs on foreign remittances. The authors find that the effect of transaction costs on remittance flows is negative and significant; suggesting that a high cost will either refrain migrants from sending money back home or make them remit through informal channels. They also find that remittances are facilitated by the existence of migrant networks and improvements in home and host country financial services. Distance, which has been used in previous studies as an indicator of the cost of remitting, is found to be a poor proxy.
Volume (Year): 10 (2016)
Issue (Month): ()
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References listed on IDEAS
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- Munawar Iqbal & M Fahim Khan, 1981. "Economic Implications of the Return Flow of Immigrants from the Middle East A Preliminary Study," PIDE-Working Papers 1981:132, Pakistan Institute of Development Economics.
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- John Gibson & David McKenzie & Halahingano Rohorua, 2006. "How Cost Elastic are Remittances? Estimates from Tongan Migrants in New Zealand," Working Papers in Economics 06/02, University of Waikato, Department of Economics.
- Elina Ribakova & Balázs Horváth & Dimitri G Demekas & Yi Wu, 2005. "Foreign Direct Investment in Southeastern Europe; How (and How Much) Can Policies Help?," IMF Working Papers 05/110, International Monetary Fund.
- Schiopu, Ioana & Siegfried, Nikolaus, 2006. "Determinants of workers’ remittances: evidence from the European Neighbouring Region," Working Paper Series 0688, European Central Bank. Full references (including those not matched with items on IDEAS)
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