Remittances and Financial Development: Substitutes or Complements in Economic Growth?

21 Pages Posted: 21 Aug 2008 Last revised: 27 Nov 2008

See all articles by Giulia Bettin

Giulia Bettin

Università Politecnica delle Marche - Department of Economics

Alberto Zazzaro

Polytechnic University of Marche - Faculty of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 25, 2008

Abstract

A recent study by Giuliano and Ruiz-Arranz (2006) has provided evidence of substitutability between remittances and financial development in fostering economic growth in developing countries. In this paper, we introduce a new qualitative inefficiency indicator of the domestic banking system and show that migrants' remittances positively affect economic growth only in countries where domestic banks are sufficiently efficient. This complementarity result is robust to controls for other financial development and institutional quality indicators.

Keywords: migrants' remittances, financial development, banks' efficiency, economic growth

JEL Classification: F22, F43, O16

Suggested Citation

Bettin, Giulia and Zazzaro, Alberto, Remittances and Financial Development: Substitutes or Complements in Economic Growth? (November 25, 2008). Available at SSRN: https://ssrn.com/abstract=1240659 or http://dx.doi.org/10.2139/ssrn.1240659

Giulia Bettin (Contact Author)

Università Politecnica delle Marche - Department of Economics ( email )

Piazzale Martelli 8
Ancona, 18039
Italy
+39 071 2207079 (Phone)
+39 071 2207102 (Fax)

Alberto Zazzaro

Polytechnic University of Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

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