Remittance Inflows, Financial Inclusion, and Economic Development: An Empirical Analysis of the World Sample

Policies to attract extra inward remittances and improve financial inclusion status could pull middle-income countries out of middle-income traps. We empirically investigate the impacts of remittance inflows, financial inclusion, and economic development and whether inward remittances may help to co...

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Bibliographic Details
Published in:Policy File 2019
Main Authors: Tu, Chuc Anh, Phi, Nguyet Thi Minh, Tuan, Le Quoc, Yoshino, Naoyuki, Sarker, Tapan, Taghizadeh-Hesary, Farhad
Format: Report
Language:English
Subjects:
Asian Development Bank Institute
Developing countries
Economic policy
LDCs
Social conditions & trends
Online Access:Request full text
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Summary:Policies to attract extra inward remittances and improve financial inclusion status could pull middle-income countries out of middle-income traps. We empirically investigate the impacts of remittance inflows, financial inclusion, and economic development and whether inward remittances may help to construct an inclusive financial system. Using both endogeneity-robust generalized method of moments and a structural equation model, our results show that remittances and financial inclusions are engines of growth in countries of different income groups. This implies that the policies to attract extra inward remittances and improve financial inclusion status are of great importance and could pull middle-income countries out of middle-income traps. To this end, our empirical study helps to shed light on the development dilemma of remittance inflows and financial inclusion and explains both direct and indirect mechanisms through which these effects may happen.