Do financial development drive remittances? Empirical evidence from India

Abstract

Remittances being a stable inflow of foreign currency, account for a substantial part of India's Balance of Payment account. In several developing countries, remittances exceed the receipts from the export of goods and services, and even capital flows such as Foreign Institutional Investment, Foreign Direct Investment, and Official Development Assistance. Remittances are known for their countercyclical nature during the sharp economic downturns, compared to other financial flows that are typically procyclical. Hence, it is known as a possible financing source for economic evolution in emerging economic systems. It is essential to determine the elements that drive remittances, as it may enable us to channelize this inflow to reap its developmental potential efficiently. Several macroeconomic determinants of remittances are well researched in the literature by researchers around the globe. However, not even a single study has been given to the financial development, determinants of remittances in the Indian setting. Therefore, this survey is a humble effort to bridge this gap. We utilize multiple regression and autoregressive distributed lag approach to cointegration which finds that several financial developments and financial openness variables have a substantial impact on remittances in the short run as well as in the long run. In accession to that, we incorporate each dummy variable for the global financial crisis and the concurrent negative oil price shock and negative output shock in the host nations. Remittances are found to be resilient during the crisis period while being adversely affected by the adverse economic shocks in the host nations.

Dose Remittances Matter for Openness and Financial Stability: Evidence From Least Developed Economies

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The Relationship among Family Business, Corporate Governance, and Firm Performance: An Empirical Assessment in the Tourism Sector

“…Thus, the exclusion of microenterprises avoids the risks related to the analysis of non-comparable data. The analysis has been conducted through a quantitative approach based on OLS regressions (Pandikasala et al 2020;Saif Ul Islam et al 2020). The OLS represents one of the leading research methods adopted by accounting scholars to test a hypothesis based on the combination of factors (Leone et al 2019;Stone and Rasp 1991).…”

“…In fact, despite the similarities between financial ratios, prior studies agreed about the need to conduct different analysis in studies about the relationship between financial performance and organizations' characteristics (Pizzi et al 2020). The analysis has been conducted through a quantitative approach based on OLS regressions (Pandikasala et al 2020;Saif Ul Islam et al 2020). The OLS represents one of the leading research methods adopted by accounting scholars to test a hypothesis based on the combination of factors (Leone et al 2019;Stone and Rasp 1991).…”

Bancor Comes of Age: A Case for an Indian Bitcoin Reserve

“…Bitcoin can spur investments and remittances: Transferring Bitcoin between parties is quicker and much cheaper than traditional banking channels which charge large commissions and take longer to settle (Kim, 2017). Pandikasala et al (2020) highlight that higher transaction costs have an impact on remittance flows with an estimate that an increase of 1% in transaction costs would result in 14-23% drop in recorded remittances. For context, India received an estimated $83 Billion in remittances from around the world in 2020 (World Bank Group, 2021).…”