Remittances and credit in developed and developing countries: A dynamic panel analysis

Vincent Fromentin (1) , Florian Leon (2)

1 CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises
2 FERDI - Fondation pour les Etudes et Recherches sur le Développement International

This article investigates the impact of remittances on credit in 30 developing (low and middle income) countries and 27 developed (high-income) countries during the period of 2000-2014. This paper differs from existing literature in two ways. First, we distinguish the impact of remittances on credit in both the short run and the long run. Second, we investigate whether remittances influence credit provided to households and credit provided to firms differently, thanks to a new dataset. Our results indicate that (i) remittances have a positive impact on credit in the long run but no impact in the short run; (ii) remittances have a stronger effect on household credit than on firm credit in developing countries; and, (iii) remittances stimulate credit provision through firm credit in developed countries.

Mots clés: Remittances; Financial development; Household credit; Firm credit; PMG estimator

Domaines: Sciences de l'Homme et Société; Economies et finances

Vincent Fromentin, Florian Leon. Remittances and credit in developed and developing countries: A dynamic panel analysis. Research in International Business and Finance, 2019, 48, pp.310-320. ⟨10.1016/j.ribaf.2018.12.010⟩. ⟨halshs-02131192⟩