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2019 | OriginalPaper | Buchkapitel

5. Remittances, Regulation, and Financial Development in Sub-Saharan Africa

verfasst von : James Busumtwi-Sam

Erschienen in: The Failure of Financial Regulation

Verlag: Springer International Publishing

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Abstract

This chapter critically examines the financial regulations needed to leverage remittances into positive sustainable development outcomes in sub-Saharan Africa. Although remittances have been the fastest growing, most stable, resilient, and reliable source of private capital flows to the region since the 2008 financial crisis, regulations have not kept pace with their increased importance. Noting the context-dependent nature of the remittance-development relationship, the chapter focuses on financial development as a key context. Leveraging remittances into positive development outcomes requires a financial regulatory system that enhances complementarities along the remittance transfer chain. Regulations are needed to expand market access and competition, reduce financial exclusion, facilitate technological innovations in financial services, reduce high transaction costs and informal transfers, enhance accuracy in remittance reporting, and curb illicit financial flows.

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Vorheriges Kapitel How and Why Moral HazardMoral hazard Has Distorted Financial Regulation

Nächstes Kapitel Regulatory Mayhem in OffshoreOffshore financial havens Finance: What the Panama PapersPanama Papers Reveal

A major challenge for financial regulation globally and nationally is the pace of technological change.

For example, the flow of remittances tends to increase during periods of downturn in the economies of the senders’ home countries/communities, which occurs in large part because of the familial/community attachments, bonds, and obligations linking senders and recipients (World Bank 2016).

Such dependence constitutes a major challenge for the credit position of these countries. For a study of the impact of remittances on the sovereign ratings of low- and middle-income economies, refer to Avendano et al. (2011) and Ratha et al. (2011).

The African Union Commission (AUC), the European Commission (EC), the World Bank, the African Development Bank (AfDB), and the International Organization for Migration (IOM) collaborated to create the African Institute for Remittances (AIR).

A bond is a debt security instrument with a maturity of more than one year and is usually tradable in financial markets. A diaspora bond is one issued by a country specifically targeting its own diaspora to tap into the latter’s assets in their host countries (African Development Bank 2010a). A ‘remittance-backed security’ or ‘securitized remittance’ is a bond backed by the future flow of remittances into a trust account held by a banking institution or money transfer organization.

The practice of issuing diaspora bonds goes back to the early 1930s when Japan and China first issued them followed in the 1950s by Israel and later by India.

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Titel: Remittances, Regulation, and Financial Development in Sub-Saharan Africa
verfasst von: James Busumtwi-Sam
Verlag: Springer International Publishing
Buch: The Failure of Financial Regulation
Print ISBN: 978-3-030-05679-7

Electronic ISBN: 978-3-030-05680-3

Copyright-Jahr: 2019
DOI: https://doi.org/10.1007/978-3-030-05680-3_5