Do transfer costs matter for foreign remittances?

Junaid Ahmed and Inmaculada Martínez-Zarzoso

Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), 2016, vol. 10, No 2016-4, 36 pages

Abstract: 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.

Keywords: remittances; geographical distance; transaction cost; financial services; Pakistan (search for similar items in EconPapers)
JEL-codes: F22 F30 O11 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifweej:20164

DOI: 10.5018/economics-ejournal.ja.2016-4

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