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What Explains Remittance Fees? Panel Evidence
Author:
Thorsten Becknull

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,
Mathilde Janfils
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Mr. Kangni R Kpodar
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 063
Language:
English
Publication Date:
01 Apr 2022
DOI:
https://doi.org/10.5089/9798400205439.001
ISBN:
9798400205439
ISSN:
1018-5941
Pages:
37
Keywords:
Remittances; migration; access to financial services; remittance fee; remittance cost; remittance corridor; A. remittance; panel evidence; Exchange rate arrangements; Capital controls; Plurilateral trade; Global
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This paper uses data across 365 corridors to document time and country variation in remittance fees and explore factors predicting variation in remittance fees. We document a general reduction in such fees over the past decade although the goal of fees below 3 percent has not been met yet in many corridors. We identify both cost- and risk-based constraints and market structure as barriers to lower remittance fees. Higher transaction costs as result of a more rural population in the sending country and lower scale are associated with higher remittance fees. However, lower risks due to the stability of fixed exchange rates and Internet rather than cash payment are associated with lower remittance fees. Finally, remittance corridors dominated by banks and few players are characterized by higher fees.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 063