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UNU-WIDER Remittances and Financial Inclusion in Development

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A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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Remittances and Financial Inclusion in Development

In this paper we focus on the relationship between remittance inflows and financial inclusion in developing countries. We present single equation estimates on remittances and financial inclusion, and system estimates in which economic growth is explained by e.g., financial inclusion, and financial inclusion by, e.g., remittances inflows. These regressions clearly confirm our main hypothesis that remittances have a development impact through their effect on financial inclusion. Overall, our paper indicates the importance of studying the effects of remittances in developing countries. Remittances, in terms of size, are not only one of the main capital inflows in developing countries, often even more substantial than ODA, but they also appear to have a robust positive effect on economic growth.
Publisher:
UNU-WIDER
Series:
WIDER Research Paper
Volume:
2007/49
Title:
Remittances and Financial Inclusion in Development
Authors:
Helen S. Toxopeus and Robert Lensink
Publication date:
August 2007
ISSN Web:
1810-2611
ISBN Web:
9291909947
ISBN 13 Web:
9789291909940
Copyright holder:
© UNU-WIDER
Copyright year:
2007
Keywords:
capital flows, remittances, finance
JEL:
F24, G21
Project:
Conference on 'Aid: Principles, Policies and Performance'
Sponsor:
The governments of Denmark (Royal Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Norway (Royal Ministry of Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).
Format:
online

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