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Do workers'remittances promote financial development ?

Listed author(s):
  • Aggarwal, Reena
  • Demirguc-Kunt, Asli
  • Martinez Peria, Maria Soledad

Workers'remittances to developing countries have become the second largest type of flows after foreign direct investment. The authors use data on workers'remittance flows to 99 developing countries from 1975-2003 to study the impact of remittances on financial sector development. In particular, they examine whether remittances contribute to increasing the aggregate level of deposits and credit intermediated by the local banking sector. This is an important question considering the extensive literature that has documented the growth-enhancing and poverty-reducing effects of financial development. The findings provide strong support for the notion that remittances promote financial development in developing countries.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3957.

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Date of creation: 01 Jul 2006
Handle: RePEc:wbk:wbrwps:3957
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  24. Ernesto López-Córdova, 2005. "Globalization, Migration, and Development: The Role of Mexican Migrant Remittances," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2005), pages 217-248, August.
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  34. repec:hrv:faseco:30728041 is not listed on IDEAS
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  36. Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank.
  37. Adams, Richard H. Jr., 2004. "Remittances and poverty in Guatemala," Policy Research Working Paper Series 3418, The World Bank.
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  41. Enrica Detragiache & Asli Demirgüç-Kunt, 1998. "Financial Liberalization and Financial Fragility," IMF Working Papers 98/83, International Monetary Fund.
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