This paper investigates the effect of remittance inflows on financial inclusion. Using data from high remittance-receiving developing countries and applying dynamic panel data methods, we find that remittance inflow has a negative impact on financial inclusion for countries with low level of remittances. However, this relationship is positive for countries with high level of remittances. Our study found that there exists a nonlinear relationship between remittances and financial inclusion. We also show that the effect of remittances on the financial inclusion is conditional upon people’s perception about institutions.

Presented at the AEA/ASSA Meetings, 4 January 2020, International Trade and Finance Association (ITFA) Session: Topics in International Trade & Finance, R&D Investment, and Trade & Financial Sanctions against Iran.

Keywords:

JEL: G15, G21, C23

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