Financial development, remittances, and poverty reduction: Empirical evidence from a macroeconomic viewpoint

We empirically analyze the interaction effects of financial development and remittances on poverty conditions in developing countries. By applying the generalized method of moments to panel data from 120 developing countries during 1980-2013, we find that financial development and remittance inflows help ameliorate poverty conditions in developing countries. In addition, we find that remittances substitute for financial development in the poverty-alleviating process. Therefore, developing countries should leverage either the domestic or external financial sources for their poverty reduction strategies, depending on their respective situations.