ABSTRACT

The dramatic growth of remittances in recent years has exposed their ability to reshape migrant's source countries at the macroeconomic and microeconomic levels. The majority of studies concerning remittances and banking have focused on empirically illustrating that remittances cause financial development. The chapter focuses on the state of Kerala, which accounts for a majority of India's migrants and a large slice of its remittances. In addition to the preliminary analysis, regression analysis is necessary to determine whether controlling for households' observable characteristics eliminates the apparent relationship between remittances and having a bank account or having any bank interaction. Results indicate that remittance recipient households are much more likely to have bank accounts. Probit analysis indicates that when considering all households in relation to regressions with 'bank account' or 'any bank' as the dependent variable, the marginal effect of remittance is still highly significant when controlling for a household's observable characteristics.