Remittance Transfer to Developing Countries: Role of Digital Banking and Information and Communication Technologies

Abstract

This study investigates the influence of digital banking and information and communication technology (ICT) on remittance transmission in six developing nations. For empirical estimation, panel data spanning 2000-2020 are chosen. Empirical assessment employs Continuously Updated Bias-Corrected (CUPBC) and Continuously Updated Fully Modified (CUPFM) panel estimate techniques. The study discovered that digital banking and ICT adoption increased the flow of remittances to underdeveloped nations. Concerning control factors, the study indicated that economic growth and inflation rate harm remittance transfers to developing countries, although interest rate had no significant effect. In addition, granger causality reveals a bidirectional causal relationship between remittance transfer and digital banking and ICT technology. The study's findings indicate that the governments of the selected nations engage more in digitalization in the form of e-banking, mobile banking, and internet banking, which reduce transaction costs and increase remittance transfers in the specified countries.