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Inter-linkages between remittance and savings in Ghana

Author

Listed:
  • Peter Quartey
  • Charles Ackah
  • Monica Puoma Lambon-Quayefio

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.

Suggested Citation

  • Peter Quartey & Charles Ackah & Monica Puoma Lambon-Quayefio, 2018. "Inter-linkages between remittance and savings in Ghana," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 46(1), pages 152-166, August.
  • Handle: RePEc:eme:ijsepp:ijse-12-2017-0618
    DOI: 10.1108/IJSE-12-2017-0618
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    Citations

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    Cited by:

    1. Strike Mbulawa & Samuel Chingoiro & Robert Machera, 2022. "Dynamics of the remittances: Fnancial development nexus in Sub Saharan Africa (SSA)," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(4), pages 171-182, June.
    2. Imouokhome Peter Afen-Okhai, 2023. "Impact of Migration and Remittances on Economic Growth in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(8), pages 569-605, August.
    3. Peter Nderitu GITHAIGA, 2019. "Foreign Remittances, Private Sector Investment and Banking Sector Development," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 3(2), pages 85-112.

    More about this item

    Keywords

    Remittances; Treatment effect; Savings; E44; F22; F29;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F29 - International Economics - - International Factor Movements and International Business - - - Other

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