Financial liberalization and remittances: Recent panel evidence |
| |
Authors: | James T Bang Aniruddha Mitra |
| |
Institution: | 1. Department of Finance, Economics and Decision Science, St. Ambrose University, Davenport 52803 United States;2. Economics Program, Division of Social Studies, Bard College, Annandale-on-Hudson 12504 United States |
| |
Abstract: | We investigate the impact of financial liberalization on remittances to 84 countries over the period 1986–2005. Explicitly accounting for the multidimensionality of financial reform, we find that the various dimensions impact remittances differently: Increased economic freedom in the financial sector, as captured by absence of direct government control over the allocation of credit, has a positive and immediate impact. However, the improved robustness of financial markets, as captured by the development of security markets, improvement in the quality of banking supervision, and removal of stringent restrictions on interest rates and international capital, has a negative and lagged effect. The net combined effect reveals that financial liberalization may have a modest negative impact on remittances in the long run. |
| |
Keywords: | remittances financial liberalization economic freedom institutions |
|
|