Inter-linkages between remittance and savings in Ghana

Peter Quartey, Charles Ackah, Monica Puoma Lambon-Quayefio

Research output: Contribution to journalArticlepeer-review

11 Citations (Scopus)

Abstract

Purpose: The increase in volumes and circulation of internal and international remittances have become a substantial part of resource flow for economic development especially in developing countries with a significant impact on household welfare. The purpose of this paper is to examine the relationship between remittances and savings mobilization. Design/methodology/approach: Using the most recent wave of the Ghana Living Standard Survey data, the study accounts for the endogeneity in remittance receipts by employing treatment effect estimators, in addition to a probit model to establish the relationship between remittances and likelihood of savings. Findings: The results suggest that receiving remittances significantly affects household’s propensity to save. Households that receive international remittances seem to have a slightly higher probability of savings compared to households that receive only domestic remittances. Originality/value: From the literature, whereas the theoretical relationship between savings and remittances is mixed, it is also evident that the empirical relationship between remittances and savings has not been clearly established, especially in sub-Saharan African countries in general and Ghana in particular. The present study adds to the paucity in the literature in two main ways. First, the study provides empirical evidence on the relationship between remittances and savings by not only focusing on international remittances but also on internal remittances. Second, in sharp departure from other studies, the current study employs more robust empirical estimators in estimating the relationship between remittances and savings.

Original languageEnglish
Pages (from-to)152-166
Number of pages15
JournalInternational Journal of Social Economics
Volume46
Issue number1
DOIs
Publication statusPublished - 7 Jan 2019

Keywords

  • Remittances
  • Savings
  • Treatment effect

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