Reference : Financial Integration and Remittances
Scientific journals : Article
Business & economic sciences : International economics
Financial Integration and Remittances
Beine, Michel mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Lodigiani, Elisabetta [> >]
Vermeulen, Robert John Gerard [> >]
Regional Science & Urban Economics
Elsevier Science
Yes (verified by ORBilu)
[en] Remittances ; Financial Openness ; Government Policy
[en] Migrant remittances increased strongly since the 1980s, becoming an important and reliable source of funds
for many developing countries. Therefore, there is a strong incentive for receiving countries to attract more
remittances, especially through formal channels that turn out to be either less expensive and/or less risky
than informal ones. One way of doing so is to increase their country's financial openness, but this policy option
might also generate additional costs in terms of macroeconomic volatility. In this paper we investigate
the link between remittance receipts and financial openness. We statistically test for the existence of such
a relationship with a sample of 66 mostly developing countries from 1980–2005. Empirically we use a dynamic
generalized ordered logit model to deal with the categorical nature of financial openness policy. We
apply a two-step method akin to two stage least squares to deal with the endogeneity of remittances and potential
measurement errors. We find a strong positive statistical and economic effect of remittances on financial

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