Remittances, Financial Development, and Growth

Paola Giuliano and Marta Ruiz-Arranz ()
Additional contact information
Marta Ruiz-Arranz: International Monetary Fund

No 2160, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Despite the increasing importance of remittances in total international capital flows, the relationship between remittances and growth has not been adequately studied. This paper studies one of the links between remittances and growth, in particular how local financial sector development influences a country’s capacity to take advantage of remittances Using a newly-constructed dataset for remittances covering about 100 developing countries, we find that remittances boost growth in countries with less developed financial systems by providing an alternative way to finance investment and helping overcome liquidity constraints. The study also explores some common myths about remittances and suggests that they are predominantly profit-driven and mostly pro-cyclical.

Keywords: financial development; remittances; growth (search for similar items in EconPapers)
JEL-codes: F22 F43 O16 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2006-06
New Economics Papers: this item is included in nep-afr, nep-cfn, nep-dev, nep-fdg and nep-fmk
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (57)

Published - published in: Journal of Development Economics, 2009, 90 (1), 144-152

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Related works:
Journal Article: Remittances, financial development, and growth (2009)
Working Paper: Remittances, Financial Development, and Growth (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp2160

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