IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp9340.html
   My bibliography  Save this paper

Remittances and Credit Markets: Evidence from Senegal

Author

Listed:
  • Mbaye, Linguère Mously

    (African Development Bank)

Abstract

This study investigates the impact of remittances on credit markets in Senegal. The findings show that remittances and credit markets are complements; namely, the receipt of remittances increases the likelihood of having a loan in a household. This result is robust after controlling for the potential endogeneity of remittances through household fixed effects and an instrumental variable approach. A detailed analysis also shows that the impact of remittances on credit markets is mainly driven by loans taken for consumption and food, in particular, as well as loans provided by informal institutions.

Suggested Citation

  • Mbaye, Linguère Mously, 2015. "Remittances and Credit Markets: Evidence from Senegal," IZA Discussion Papers 9340, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9340
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp9340.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dilip Ratha & Sanket Mohapatra & Caglar Ozden & Sonia Plaza & William Shaw & Abebe Shimeles, 2011. "Leveraging Migration for Africa : Remittances, Skills, and Investments [Optimisation du phénomène migratoire pour l’Afrique : Envois de fonds, compétences et investissements]," World Bank Publications - Books, The World Bank Group, number 2300.
    2. Ambrosius, Christian & Cuecuecha, Alfredo, 2013. "Are Remittances a Substitute for Credit? Carrying the Financial Burden of Health Shocks in National and Transnational Households," World Development, Elsevier, vol. 46(C), pages 143-152.
    3. Jean-Paul Azam & Flore Gubert, 2005. "Those in Kayes. The Impact of Remittances on Their Recipients in Africa," Revue économique, Presses de Sciences-Po, vol. 56(6), pages 1331-1358.
    4. Christopher Udry, 1994. "Risk and Insurance in a Rural Credit Market: An Empirical Investigation in Northern Nigeria," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 495-526.
    5. Conning, Jonathan & Udry, Christopher, 2007. "Rural Financial Markets in Developing Countries," Handbook of Agricultural Economics, in: Robert Evenson & Prabhu Pingali (ed.), Handbook of Agricultural Economics, edition 1, volume 3, chapter 56, pages 2857-2908, Elsevier.
    6. Alice Mesnard, 2004. "Temporary migration and capital market imperfections," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 242-262, April.
    7. Rosenzweig, Mark R, 1988. "Risk, Implicit Contracts and the Family in Rural Areas of Low-income Countries," Economic Journal, Royal Economic Society, vol. 98(393), pages 1148-1170, December.
    8. Gupta, Sanjeev & Pattillo, Catherine A. & Wagh, Smita, 2009. "Effect of Remittances on Poverty and Financial Development in Sub-Saharan Africa," World Development, Elsevier, vol. 37(1), pages 104-115, January.
    9. Richard P C Brown & Fabrizio Carmignani & Ghada Fayad, 2011. "Migrants’ Remittances and Financial Development: Macro- and Micro-level Evidence of a Perverse Relationship," OxCarre Working Papers 059, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    10. repec:dau:papers:123456789/4571 is not listed on IDEAS
    11. Richard P. C. Brown & Fabrizio Carmignani & Ghada Fayad, 2013. "Migrants’ Remittances and Financial Development: Macro- and Micro-Level Evidence of a Perverse Relationship," The World Economy, Wiley Blackwell, vol. 36(5), pages 636-660, May.
    12. David McKenzie & Hillel Rapoport, 2010. "Self-Selection Patterns in Mexico-U.S. Migration: The Role of Migration Networks," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 811-821, November.
    13. Fafchamps, Marcel & Lund, Susan, 2003. "Risk-sharing networks in rural Philippines," Journal of Development Economics, Elsevier, vol. 71(2), pages 261-287, August.
    14. HwaJung Choi, 2007. "Are Remittances Insurance? Evidence from Rainfall Shocks in the Philippines," The World Bank Economic Review, World Bank, vol. 21(2), pages 219-248, May.
    15. Richter, Susan M., 2008. "The Insurance Role of Remittances on Household Credit Demand," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6261, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Alcaraz, Carlo & Chiquiar, Daniel & Salcedo, Alejandrina, 2012. "Remittances, schooling, and child labor in Mexico," Journal of Development Economics, Elsevier, vol. 97(1), pages 156-165.
    17. Woodruff, Christopher & Zenteno, Rene, 2007. "Migration networks and microenterprises in Mexico," Journal of Development Economics, Elsevier, vol. 82(2), pages 509-528, March.
    18. Udry, Christopher, 1990. "Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy," The World Bank Economic Review, World Bank, vol. 4(3), pages 251-269, September.
    19. Mawhood, Rebecca & Gross, Robert, 2014. "Institutional barriers to a ‘perfect’ policy: A case study of the Senegalese Rural Electrification Plan," Energy Policy, Elsevier, vol. 73(C), pages 480-490.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christian Paul & Dillon Brian, 2016. "Working Paper 241 - Long term consequences of consumption seasonality," Working Paper Series 2349, African Development Bank.
    2. Mduduzi Biyase & Yourishaa Naidoo, 2023. "The Symmetric and Asymmetric Effect of Remittances on Financial Development: Evidence from South Africa," IJFS, MDPI, vol. 11(1), pages 1-17, January.
    3. Roseline Nyakerario Misati & Anne Kamau & Hared Nassir, 2019. "Do migrant remittances matter for financial development in Kenya?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-25, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mbaye Linguère Mously, 2016. "Working Paper 232 - Remittances and Access to rural credit markets Evidence from Senegal," Working Paper Series 2325, African Development Bank.
    2. Linguère Mously Mbaye, 2021. "Remittances and rural credit markets: Evidence from Senegal," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 183-199, February.
    3. Christian Ambrosius, 2016. "Remittances and Financial Access: Is There Really a Link and for Whom? Evidence from Mexican Household Data," The World Economy, Wiley Blackwell, vol. 39(7), pages 964-982, July.
    4. Yang, Dean, 2009. "International Migration and Human Development," MPRA Paper 19212, University Library of Munich, Germany.
    5. Fromentin, Vincent & Leon, Florian, 2019. "Remittances and credit in developed and developing countries: A dynamic panel analysis," Research in International Business and Finance, Elsevier, vol. 48(C), pages 310-320.
    6. Mahmud, Mahreen & Riley, Emma, 2021. "Household response to an extreme shock: Evidence on the immediate impact of the Covid-19 lockdown on economic outcomes and well-being in rural Uganda," World Development, Elsevier, vol. 140(C).
    7. Renata Baborska & Emilio Hernandez & Emiliano Magrini & Cristian Morales-Opazo, 2020. "The impact of financial inclusion on rural food security experience: A perspective from low-and middle-income countries," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 10(2), pages 1-18.
    8. Ingela Alger & Laura Juarez & Miriam Juarez-Torres & Josepa Miquel-Florensa, 2020. "Do Informal Transfers Induce Lower Efforts? Evidence from Lab-in-the-Field Experiments in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 69(1), pages 107-171.
    9. Jonathan P. Thomas & Timothy Worrall, 2002. "Gift-giving, Quasi-credit and Reciprocity," Rationality and Society, , vol. 14(3), pages 308-352, August.
    10. Di Falco, Salvatore & Feri, Francesco & Pin, Paolo & Vollenweider, Xavier, 2018. "Ties that bind: Network redistributive pressure and economic decisions in village economies," Journal of Development Economics, Elsevier, vol. 131(C), pages 123-131.
    11. Ambrosius, Christian, 2012. "Are remittances a "catalyst" for financial access? Evidence from Mexican household data," Discussion Papers 2012/8, Free University Berlin, School of Business & Economics.
    12. Ait Benhamou, Zouhair & Cassin, Lesly, 2021. "The impact of remittances on savings, capital and economic growth in small emerging countries," Economic Modelling, Elsevier, vol. 94(C), pages 789-803.
    13. Amuedo-Dorantes, Catalina & Mazzolari, Francesca, 2010. "Remittances to Latin America from migrants in the United States: Assessing the impact of amnesty programs," Journal of Development Economics, Elsevier, vol. 91(2), pages 323-335, March.
    14. Christian Ambrosius & Barbara Fritz & Ursula Stiegler, 2014. "Remittances for Financial Access: Lessons from Latin American Microfinance," Development Policy Review, Overseas Development Institute, vol. 32(6), pages 733-753, November.
    15. Josephson, Anna & Shively, Gerald E., 2021. "Unanticipated events, perceptions, and household labor allocation in Zimbabwe," World Development, Elsevier, vol. 141(C).
    16. Alfani, Federica & Dabalen, Andrew & Fisker, Peter & Molini, Vasco, 2015. "Can we measure resilience ? a proposed method and evidence from countries in the Sahel," Policy Research Working Paper Series 7170, The World Bank.
    17. Belhaj, Mohamed & Deroïan, Frédéric, 2012. "Risk taking under heterogenous revenue sharing," Journal of Development Economics, Elsevier, vol. 98(2), pages 192-202.
    18. Bharati Basu & Aranya Biswas, 2024. "Do remittances affect healthcare expenditure?: evidence from Kenya," Economics Bulletin, AccessEcon, vol. 44(3), pages 1034-1048.
    19. Riley, Emma, 2018. "Mobile money and risk sharing against village shocks," Journal of Development Economics, Elsevier, vol. 135(C), pages 43-58.
    20. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-45, June.

    More about this item

    Keywords

    remittances; credit markets; migration;
    All these keywords.

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp9340. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.