What Explains Remittance Fees? Panel Evidence

Thorsten Beck, Mathilde Janfils and Kangni Kpodar

No 2022/063, IMF Working Papers from International Monetary Fund

Abstract: This paper uses data across 365 corridors to document time and country variation in remittance fees and explore factors predicting variation in remittance fees. We document a general reduction in such fees over the past decade although the goal of fees below 3 percent has not been met yet in many corridors. We identify both cost- and risk-based constraints and market structure as barriers to lower remittance fees. Higher transaction costs as result of a more rural population in the sending country and lower scale are associated with higher remittance fees. However, lower risks due to the stability of fixed exchange rates and Internet rather than cash payment are associated with lower remittance fees. Finally, remittance corridors dominated by banks and few players are characterized by higher fees.

Keywords: Remittances; migration; access to financial services; remittance fee; remittance cost; remittance corridor; A. remittance; panel evidence; Exchange rate arrangements; Capital controls; Plurilateral trade; Global (search for similar items in EconPapers)
Pages: 37
Date: 2022-04-01
New Economics Papers: this item is included in nep-ban, nep-fdg and nep-pay
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Citations: View citations in EconPapers (4)

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