Remittances and households’ savings behaviour in Bangladesh

Abstract

Purpose The purpose of this study is to examine the impact of remittance inflow on households’ savings behaviour in Bangladesh. Remittances are considered as the countercyclical flow of income for its recipient economies. It surges the liquidity of the households receiving remittances, allows them to endure local economic shocks and facilitates them to practice productive activities. Remittances often form a big pool of resources for investment which complement the national savings and support the country’s growth through higher rates of capital accumulation. Therefore, if a significant portion of the remittance is used for savings it can lead to prominent economic growth in the long term. Design/methodology/approach Existing literature indicates remittance-receiving households have a greater propensity to use remittance income to meet basic consumption. However, based on the survey conducted by the Bangladesh Bureau of Statistics on remittances and household savings (SIR, 2016) and using the ordinary least square regression analysis method, to identify the connection between remittances and household’s saving (SIR, 2016) and using the ordinary least square regression analysis method, to identify the connection between remittances and household’s savings behaviour in Bangladesh. Findings The findings of this study represent remittances encourage households to pursue different kinds of savings in Bangladesh. Savings are made in the form of opening savings accounts, deposit pension scheme/fixed deposits/Bonds, insurance policies, also savings through non-governmental organizations, cooperative societies and savings at home. Other than remittances the demographic characteristics of the household head also influence the savings choices. Originality/value To enable the implementation of appropriate policies to boost savings, analysis from both perspectives; the household and the national level, requires strong vigilance and surveillance.

Categorising households based on shock severity experience: The effects of remittances on consumption smoothing post‐shock in Nigeria

“…The development of a savings awareness campaign is also recommended to inform households of the importance of setting aside some of the remittances they get during times of low or no shock so that they can use those funds to finance consumption and non‐farm businesses during a crisis when it strikes. Profits from the revenues of these firms can improve a family's capacity to withstand financial adversity; thus, if a sizable amount of the remittance is set aside for savings, it can result in significant economic growth over time, as demonstrated in Salahuddin et al (2021) in the case of Bangladesh.…”

“…Remittances can be beneficial to households when they are put to different use by their recipients such as consumption and profitable business ventures as demonstrated in Salahuddin et al (2021) to enhance the welfare of households. According Salahuddin et al's (2021) report, when applied to businesses by recipients as shown in the case of Bangladesh, remittances can generate revenues, which can improve a household's capacity to withstand financial adversity. Thus, if a sizable amount of the remittances received by households is set aside for savings, it can result in significant economic growth over time.…”

Impact of internal remittance on households' use of bank services: evidence from Vietnam

“…However, in comparison to international remittances, the impact of receiving internal remittances on the probability of a households' saving is weaker. Salahuddin et al (2021) also investigate the effects of remittances on households' savings behaviour. This study finds out that international remittances encourage households in Bangladesh to save in many forms, such as opening savings accounts, deposit pension schemes and savings at home.…”

“…However, in comparison to international remittances, the impact of receiving internal remittances on the probability of a households’ saving is weaker. Salahuddin et al. (2021) also investigate the effects of remittances on households' savings behaviour.…”

The Impact of Remittances on Saving Behaviour and Expenditure Patterns in Vietnam

“…In general, quite a few papers have examined the effect of remittances on savings and expenditure patterns (see, e.g., Castaldo and Reilly 2007;Ang et al 2009;Tabuga 2010;Clément 2011;Haider et al 2016;Quartey et al 2019;Opiniano 2021;Salahuddin et al 2022). Both the life-cycle theory of Modigliani and Brumberg (1954) and the permanent income hypothesis proposed by Friedman (1957) have been influential with regard to the identification of possible relations among remittances, expenditures, and savings.…”