The direct and indirect risk impacts on remittances: A cross‐regional specific effects

Abstract

The main purpose of this paper is to study determinants of workers' remittances especially the impact of country risk based on a regional comparison of 121 countries subdivided into six areas over the period 1984-2015. We consider possible direct and indirect effects of different risk indexes. We particularly focus on the comparison of the regional effect of economic, political, and financial risks on remittances. To capture these effects, region-specific variables are introduced. The results show that remittances are more influenced by the risk indexes than other macroeconomic variables. Regional comparison indicates that remittance inflows are more sensitive to the different risks in the MENA region compared to other world regions. The financial risk is highlighted to have the largest impact on remittances in this region. 1 | INTRODUCTION During the past decade, workers' remittances were an important source of enrichment for developing countries, particularly in the Middle East and North Africa (MENA), with about 55 billion in 2017 (World Development Indicators [WDI], 2019). A great number of earlier studies have illustrated their importance for economic growth, poverty alleviation, and investment in receiving countries (

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