Remittances, dynamics, and dramas: The role of remittances in the household demand for credit.

摘要

The dissertation explores whether migrant remittances increase a household's participation in credit market by stabilizing consumption in the face of volatile income streams. The theoretical model presented illustrated that the effectiveness of the insurance provided by remittances depends on the joint distribution of the household's income and the total income earned by the migrant network. Therefore, the effect of migrant remittances on credit market participation is theoretically ambiguous and requires an empirical approach.;Understanding the determinants of a household's net flow of remittances is the first stage in an empirical evaluation of the effect of remittances on a household's credit market participation. A reduced-form equation of remittances as a function of household characteristics, the heterogeneity of the migrant network, and realized income shocks is estimated. Shocks and proxies for a migrant network's expected income had a relatively small quantitative impact on remittances.;Second, a household's credit market participation in which remittances were hypothesized to be a key determinant was estimated. Credit market participation was defined as having a positive effective demand or a positive notional demand. Reasons why households chose not to participate in the credit market was also evaluated. Migrant network characteristics were used as instruments for remittances since they should only affect credit market participation via the volume of remittances received by the household and not directly. Results suggest that remittances have an insignificant effect on a household's effective and notional credit demand. The insignificant coefficient on remittances in the credit market participation equation may be a result of the offsetting effects of remittances. On one hand, remittances may loosen household liquidity constraints. On the other hand, remittances may provide insurance for households and increase the willingness to participate in productive activities and thus accept risky credit contract terms. Policymakers should not rely on remittances to increase household-level participation in the credit market. Instead, policymakers should invest in complementary markets, such as insurance markets instead of concentrating on pro-remittance programs.