The cost of sending money home: A panel study evidence from India’s ten largest remittance sending corridors

Manvi Kukreja () and Ratnam Mishra ()
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Manvi Kukreja: Delhi Technological University
Ratnam Mishra: Delhi Technological University

Journal of Economics and Business Letters, 2026, vol. 6, issue 5, 57-69

Abstract: The cost of sending money to India varied across corridors over the past decade, from approximately 2.5% of the transfer value via the United Arab Emirates to above 6% in Australia, yet the impact of these differentials is lacking in the literature. Using a balanced panel of India’s ten largest sending countries from 2011 to 2023, combining Remittances Prices Worldwide cost data, Reserve Bank of India, and UN DESA migrant stocks, a two-way fixed-effects model identified by the Hausman test as the preferred specification, is employed in the study. Dumitrescu-Hurlin tests revealed Granger causality, which is predominantly unidirectional from remittance volumes to costs at an annual lag; but at the two-year horizon, the evidence supports bidirectional feedback, in which cost reductions also show subsequent volume gains. Costs and flows form a self-reinforcing loop in which lower costs sustain volumes contemporaneously, whereas higher volumes reduce costs over time. Under a scenario calculation using the lower-bound (RE) elasticity, a 10% cost reduction is associated with roughly USD 13 billion in additional annual inflows; because Granger causality evidence indicates jointly determined dynamics rather than a simple one-way price channel, this figure is best read as an association-based scenario, positioning cost reduction as a promising but not yet causally confirmed policy lever for India's external account.

Keywords: remittances; transaction costs; panel data; Granger causality; India (search for similar items in EconPapers)
Date: 2026
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DOI: 10.55942/jebl.v6i5.2097

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