Remittances and Banking Sector Breadth and Depth : Evidence from Mexico

Despite the rising volume of remittances flowing to developing countries, their impact on banking sector breadth and depth in recipient countries has been largely unexplored. The authors examine this topic using municipio-level data on the fraction...

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Bibliographic Details
Main Authors: Demirgüç-Kunt, Asli, López Córdova, Ernesto, Martínez Pería, María Soledad, Woodruff, Christopher
Language:English
Published: 2012
Subjects:
WAR
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090630105142
http://hdl.handle.net/10986/4175
Description
Summary:Despite the rising volume of remittances flowing to developing countries, their impact on banking sector breadth and depth in recipient countries has been largely unexplored. The authors examine this topic using municipio-level data on the fraction of households that receive remittances and on measures of banking breadth and depth for Mexico. They find that remittances are strongly associated with greater banking breadth and depth, increasing the number of branches and accounts per capita and the ratio of deposits to gross domestic product. These effects are significant both statistically and economically, even after conducting robustness tests and addressing the potential endogeneity of remittances.