Article (Scientific journals)
Financial Integration and Remittances
Beine, Michel; Lodigiani, Elisabetta; Vermeulen, Robert John Gerard
2012In Regional Science and Urban Economics, 42 (5)
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Keywords :
Remittances; Financial Openness; Government Policy
Abstract :
[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 openness.
Disciplines :
International economics
Author, co-author :
Beine, Michel  ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)
Lodigiani, Elisabetta
Vermeulen, Robert John Gerard
Language :
English
Title :
Financial Integration and Remittances
Publication date :
2012
Journal title :
Regional Science and Urban Economics
ISSN :
0166-0462
Publisher :
Elsevier Science
Volume :
42
Issue :
5
Peer reviewed :
Peer Reviewed verified by ORBi
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since 08 January 2014

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