Remittances and Vulnerability in Developing Countries

This paper examines how international remittances are affected by structural characteristics, macroeconomic conditions, and adverse shocks in both source and recipient economies. The paper exploits a novel, rich panel data set, covering bilateral remittances from 103 Italian provinces to 87 developing countries over the period 2005-2011. Remittances are negatively correlated with the business cycle in recipient countries and increase especially strongly in response to adverse exogenous shocks, such as natural disasters or large terms-of-trade declines. Financial development in the source economy, which eases access to financial services for migrants and reduces transaction costs, is positively associated with remittances. Conversely, recipient-country financial development is negatively associated with remittances, suggesting that remittances help alleviate credit constraints.

Bibliographic Details

Main Authors:	Bettin, Giulia, Presbitero, Andrea F., Spatafora, Nikola
Language:	English en_US
Published:	World Bank, Washington, DC 2014-03
Subjects:	ACCESS OF MIGRANTS, ACCESS TO FINANCIAL SERVICES, AMERICAN DEVELOPMENT BANK, ARMED _CONFLICT, ARMED CONFLICT, ARMED CONFLICTS, BANK BRANCHES, BANKING SYSTEM, BANKS, BARRIERS TO REMITTANCES, BRAIN DRAIN, BULLETIN, BUSINESS CYCLE, BUSINESS CYCLES, CAPITAL FLOWS, CAPITAL INFLOWS, CENTRAL BANK, CHECKS, CITIZENSHIP, COMMODITY PRICES, COMMUNITIES OF MIGRANTS, COUNTRY OF ORIGIN, CREDIT CONSTRAINTS, CREDIT MARKETS, CYCLICAL FLUCTUATIONS, CYCLICAL MOVEMENTS, DATA ON REMITTANCES, DEBT STOCKS, DETERMINANTS OF REMITTANCES, DEVELOPING COUNTRIES, DEVELOPMENT BANK, DEVELOPMENT POLICY, DIASPORA, DISTRIBUTION OF REMITTANCES, DIVERSIFICATION, DOMESTIC CREDIT, ECONOMIC DEVELOPMENT, ECONOMIC GEOGRAPHY, ECONOMIC GROWTH, ECONOMIC HARDSHIP, ECONOMIC OUTLOOK, ECONOMIC SHOCKS, EFFECT OF REMITTANCES, EMERGING MARKET, EMERGING MARKETS, EMIGRANT REMITTANCES, EMIGRATION, EMPLOYMENT OPPORTUNITIES, ENDOGENOUS VARIABLES, EXCHANGE RATES, EXOGENOUS INCOME, EXPENDITURE, EXTERNAL DEBT, EXTERNAL FINANCE, EXTERNAL SHOCKS, FAMILIES, FAMILY LOANS, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL FLOW, FINANCIAL FLOWS, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL MARKETS, FINANCIAL RESOURCES, FINANCIAL SERVICES, FINANCIAL SYSTEM, FOREIGN EXCHANGE, FOREIGN EXCHANGE RESERVES, GENDER, GEOGRAPHIC DISPERSION, GLOBAL REMITTANCES, GLOBALIZATION, GROWTH RATE, GROWTH VOLATILITY, HOME COUNTRIES, HOME COUNTRY, HOST COUNTRIES, HOST COUNTRY, HOUSEHOLD WEALTH, HUMAN CAPITAL, IMMIGRATION, IMMIGRATION POLICIES, IMMIGRATION POLICY, IMPACT OF REMITTANCES, INCOME LEVEL, INCOME LEVELS, INCOME SHOCKS, INCREASE IN REMITTANCES, INFORMAL CHANNELS, INHERITANCE, INSTRUMENTAL VARIABLES, INSURANCE, INTEREST RATE, INTEREST RATE DIFFERENTIALS, INTERNATIONAL ASSISTANCE, INTERNATIONAL BANK, INTERNATIONAL DEBT, INTERNATIONAL ECONOMICS, INTERNATIONAL FINANCIAL INSTITUTIONS, INTERNATIONAL MIGRATION, INTERNATIONAL MONETARY FUND, INTERNATIONAL REMITTANCES, INTERNATIONAL TRANSFERS, INVESTMENT OPPORTUNITIES, LIMITED ACCESS, LIQUIDITY, LIQUIDITY CONSTRAINTS, LOCAL BANK, LOCAL CAPACITY, LOCAL ECONOMIES, LOW INCOME, LOW INCOME COUNTRIES, LOW-INCOME COUNTRIES, MACROECONOMIC CONDITIONS, MACROECONOMIC DETERMINANTS, MACROECONOMIC FLUCTUATIONS, MACROECONOMIC STABILITY, MACROECONOMICS, MARKET STRUCTURE, MIDDLE INCOME, MIDDLE INCOME COUNTRIES, MIGRANT, MIGRANT COMMUNITIES, MIGRANT REMITTANCES, MIGRANT WORKERS, MIGRANTS, MIGRATION, MONETARY FUND, MONEY TRANSFER, MONEY TRANSFER OPERATORS, NATIVE WORKERS, NATURAL DISASTERS, NEGATIVE SHOCK, NEGATIVE SHOCKS, NUMBER OF MIGRANTS, OFFICIAL DEVELOPMENT ASSISTANCE, OPEN ECONOMIES, OUTPUT VOLATILITY, PEACE, POLICY DISCUSSIONS, POLICY RESEARCH, POLICY RESEARCH WORKING PAPER, POLITICAL ECONOMY, PORTFOLIO, POSITIVE COEFFICIENT, POSTAL SYSTEM, PRIVATE CAPITAL, PRIVATE DEBT, PRIVATE SECTOR, PROGRESS, REAL ESTATE, REAL EXCHANGE RATE, RECESSION, RECESSIONS, RECIPIENT COUNTRIES, RECIPIENT COUNTRY, RECIPIENT HOUSEHOLDS, RECIPIENT OF REMITTANCES, RECIPIENTS OF REMITTANCES, REGRESSION COEFFICIENTS, REMITTANCE, REMITTANCE CHANNELS, REMITTANCE CORRIDOR, REMITTANCE CORRIDORS, REMITTANCE DATA, REMITTANCE FLOWS, REMITTANCE INFLOWS, REMITTANCE OUTFLOWS, REMITTANCE TRANSFER, REMITTANCE TRANSFERS, REMITTANCES, REMITTERS, RESERVES, RESPECT, RETURN, REVIEW OF ECONOMICS, ROLE OF REMITTANCES, SAVINGS, SEND REMITTANCES, SHARE OF CREDIT, SKILLED MIGRANTS, SMALL BUSINESSES, SOCIAL RESEARCH, SPECIFIC REMITTANCE, STANDARD DEVIATION, STANDARD ERRORS, STOCKS, STRUCTURAL CHARACTERISTICS, TEMPORARY WORKERS, TRAINING CENTRE, TRANSACTION, TRANSACTION COSTS, TRANSFER COSTS, TRANSFER SERVICES, UNDOCUMENTED MIGRANTS, UNEMPLOYMENT, VULNERABILITY, WORKER REMITTANCES, WORKERS REMITTANCES,
Online Access:	http://documents.worldbank.org/curated/en/2014/03/19272414/remittances-vulnerability-developing-countries https://hdl.handle.net/10986/17727
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