Journal Article
No. 2016-4 | February 01, 2016
Do Transfer Costs Matter for Foreign Remittances? A Gravity Model Approach

Abstract

Using bilateral data on remittance flows to Pakistan for 23 major host countries, this is the first study that examines the effect of transaction costs on foreign remittances. The authors find that the effect of transaction costs on remittance flows is negative and significant; suggesting that a high cost will either refrain migrants from sending money back home or make them remit through informal channels. They also find that remittances are facilitated by the existence of migrant networks and improvements in home and host country financial services. Distance, which has been used in previous studies as an indicator of the cost of remitting, is found to be a poor proxy.

JEL Classification:

F22, F30, O11

Assessment

  • Downloads: 1216 (Discussion Paper: 1356)

Links

Cite As

Junaid Ahmed and Inmaculada Martínez-Zarzoso (2016). Do Transfer Costs Matter for Foreign Remittances? A Gravity Model Approach. Economics: The Open-Access, Open-Assessment E-Journal, 10 (2016-4): 1—36. http://dx.doi.org/10.5018/economics-ejournal.ja.2016-4


Comments and Questions