nep-mig New Economics Papers
on Economics of Human Migration
Issue of 2007‒05‒04
two papers chosen by
Yuji Tamura
Trinity College Dublin

  1. New market segments: migrants and financial innovation By Luisa Anderloni; Daniela Vandone
  2. A Gravity Model of Workers' Remittances By Erik Lueth; Marta Ruiz-Arranz

  1. By: Luisa Anderloni (Department of Economics, Business and Statistics - University of Milan); Daniela Vandone (Department of Economics, Business and Statistics - University of Milan)
    Abstract: This paper analyses migrants' financial behaviour and financial services demand and investigates supply policies that banks can adopt in order to satisfy their specific financial needs. On the demand side we draw a theoretical framework about migrants' life cycle and financial needs to identify the sequence of temporal phases that usually characterize migrants' demand for financial products and services. Adopting this perspective, we consider the relationship among phases and goals of migratory project, priority of basic needs and resulting prioritisation of intervention by social and governmental institutions, structure of banking markets and "bancarisation" of the native population. On the supply side, we identify which features the supply of financial services and products should have in order to satisfy migrants' financial needs during their life cycle; banks should consider the "life value" of these new citizens and start up relationships in the expectation that they will become profitable customers in the medium-long run. In particular, we focus on three main groups of financial services, remittances, mortgages and pension schemes, because at present they are the most significant drivers for financial innovation. We also focus on banking experiences from different countries to identify the best practices to address migrants' financial needs.
    Keywords: Financial innovation, banking markets segmentation, financial inclusion, remittances,
    Date: 2006–11–17
  2. By: Erik Lueth; Marta Ruiz-Arranz
    Abstract: This paper creates the first dataset of bilateral remittance flows for a limited set of developing countries and estimates a gravity model for workers' remittances. We find that most of the variation in bilateral remittance flows can be explained by a few gravity variables. The evidence on the motives to remit is mixed, but altruism may be less of a factor than commonly believed. Most strikingly, remittances do not seem to increase in the wake of a natural disaster and appear aligned with the business cycle in the home country, suggesting that remittances may not play a major role in limiting vulnerability to shocks. To encourage remittances and maximize their economic impact, policies should be directed at reducing transaction costs, promoting financial sector development, and improving the business climate.
    Keywords: Bilateral remittance flows , gravity model , Workers remittances , Developing countries , Capital inflows , Business cycles , Financial sector , Exchange rate policy , Economic models ,
    Date: 2007–01–08

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