What Explains Remittance Fees? Panel Evidence
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Summary:
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.
Series:
Working Paper No. 2022/063
Subject:
Balance of payments Capital controls Exchange rate arrangements Foreign exchange International trade Plurilateral trade Population and demographics Remittances
Frequency:
regular
English
Publication Date:
April 1, 2022
ISBN/ISSN:
9798400205439/1018-5941
Stock No:
WPIEA2022063
Pages:
37
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