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Microfinance Institutions (MFIs) on the Remittances Market: Money Transfer Activity and Savings Mobilisation

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  • Ritha Sukadi Mata

Abstract

This paper is a first attempt to empirically measure the impact of a money transfer activity on MFIs’ savings mobilisation. After analysing the opportunities for MFIs to succeed in transforming remittances receivers into clients, the paper empirically tests whether MFIs operating on the remittances market have a significantly higher level of savings than others, thanks to their money transfer activity. After building our variable of interest (a dummy for the money transfer activity) based on the Mixmarket website (for the regions of Latin America and the Caribbean, East Asia and the Pacific, South Asia and Africa), we run a cross-section regression for the year 2006 between the “savings over assets” ratio as explained variable and a set of explaining variables, including our variable of interest. We find a positive and significant coefficient for the money transfer activity dummy. Latest version; August 2011 - http://www.solvay.edu/sites/upload/files/CEB_WorkingPapers/LastUpdate/wp09022.pdf

Suggested Citation

  • Ritha Sukadi Mata, 2009. "Microfinance Institutions (MFIs) on the Remittances Market: Money Transfer Activity and Savings Mobilisation," Working Papers CEB 09-022.RS, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:09-022
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    References listed on IDEAS

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    1. Dilip Ratha & Sanket Mohapatra & Zhimei Xu, 2008. "Outlook for Remittance Flows 2008-2010 : Growth Expected to Moderate Significantly, But Flows to Remain Resilient," World Bank Publications - Reports 11008, The World Bank Group.
    2. repec:idb:brikps:36818 is not listed on IDEAS
    3. Mr. Sanjeev Gupta & Ms. Catherine A Pattillo & Ms. Smita Wagh, 2007. "Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa," IMF Working Papers 2007/038, International Monetary Fund.
    4. Giuliano, Paola & Ruiz-Arranz, Marta, 2009. "Remittances, financial development, and growth," Journal of Development Economics, Elsevier, vol. 90(1), pages 144-152, September.
    5. Marguerite S. Robinson, 2001. "The Microfinance Revolution," World Bank Publications - Books, The World Bank Group, number 28956.
    6. Enrique Alberola & Rodrigo César Salvado, 2006. "Banks, remittances and financial deepening in receiving countries. A model," Working Papers 0621, Banco de España.
    7. Helen S. Toxopeus & Robert Lensink, 2007. "Remittances and Financial Inclusion in Development," WIDER Working Paper Series RP2007-49, World Institute for Development Economic Research (UNU-WIDER).
    8. Barry P. Bosworth & Susan M. Collins, 1999. "Capital Flows to Developing Economies: Implications for Saving and Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 30(1), pages 143-180.
    9. Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank.
    10. Aggarwal, Reena & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2006. "Do workers'remittances promote financial development ?," Policy Research Working Paper Series 3957, The World Bank.
    11. Hartarska, Valentina & Nadolnyak, Denis, 2008. "Does rating help microfinance institutions raise funds? Cross-country evidence," International Review of Economics & Finance, Elsevier, vol. 17(4), pages 558-571, October.
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    Cited by:

    1. Bruno, Olivier & Khachatryan, Knar, 2020. "Compulsory versus voluntary savings as an incentive mechanism in microfinance programs," Journal of Behavioral and Experimental Finance, Elsevier, vol. 26(C).
    2. Nathanael OJONG, 2014. "Credit Unions As Conduits For Microfinance Delivery In Cameroon," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 85(2), pages 287-304, June.
    3. Ritha Sukadi Mata, 2014. "Do Migrants' Deposits Reduce Microfinance Institutions Liquidity Risk?," African Development Review, African Development Bank, vol. 26(3), pages 520-531, September.
    4. Ritha Sukadi Mata, 2010. "Diversification of Microfinance Institutions: Determinants for Entering the Remittances Market," Working Papers CEB 10-043, ULB -- Universite Libre de Bruxelles.

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    More about this item

    Keywords

    savings; migrants’ savings; remittances; microfinance institutions (MFIs); money transfer activity.;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • 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
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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