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Transaction costs and recorded remittances in the post-Soviet economies: Evidence from a new dataset on bilateral flows |
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| Institution: | 1. Department of Accounting, Finance, and Economics, Griffith University, 170 Kessels Road, Nathan, Qld 4111, Australia;2. Department of Accounting, Finance, and Economics, Griffith University, Parklands Drive, Southport, Qld 4222, Australia;1. Swiss Finance Institute, Switzerland;2. Università della Svizzera Italiana, Lugano, Switzerland;3. Charles University, Prague, Czech Republic;4. Czech National Bank, Czech Republic;1. John Carroll University, USA;2. Methodist University, USA;1. Newcastle Business School, University of Newcastle, Australia;2. Centre for African Research, Engagement and Partnerships (CARE-P), University of Newcastle, Australia;3. School of Management and Economics, Center for West African Studies, University of Electronic Science and Technology of China, Chengdu, China;4. Australia Africa Universities Network (AAUN) Partner, Newcastle, Australia;5. Department of Geography and Regional Planning, Faculty of Social Science, University of Cape Coast, Cape Coast, Ghana |
| Abstract: | Labour migrants' remittances are a rapidly growing phenomenon in the countries of the former Soviet Union. The size and growth of remittances in the countries of the recipients brought the issue under the scrutiny of researchers and policymakers. In this paper we investigate the main factors behind the growing volume of remittances in the post-Soviet space. By applying panel data techniques we found that a reduction in transaction costs and a depreciation of the currency in the host country were the main factors that influenced the growth of recorded remittances. The size of transaction costs remains a significant predictor of the volume of formal remittances, even after correcting for endogeneity using an instrumental variable estimator. The inverse relationship between transaction costs and recorded remittances suggests that migrants switch from informal channels to formal channels to send remittances when costs are low. Thus lower transaction costs may help curb the proportion of informal flows and lead to increased use of remittances in the formal economy. |
| Keywords: | Remittances Migration Money transfer fees Transition Post-communist |
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