Linking remittances with financial development and ICT: a study of the Philippines

The Philippines is the fourth largest recipient of remittances in the world with booming information and communications (ICT) services. In this study, we therefore explore the short-run and long-run nexus between remittance inflows, remittances interaction with financial development and ICT, trade openness and overseas development assistance (ODA) vis-à-vis income for the period 1976 to 2010 using ARDL bounds approach. The results show remittances and remittances interaction with ICT have positive effects on income. However, aid and remittances interaction with financial development have negative effects whereas trade openness is not statistically significant. Subsequently, encouraging remittance inflows though labour mobility, minimising transfer cost, harnessing benefits from mobile network operations, and reviewing remittance transfer fees via banking systems are would be ideal for scaling up ICT, and ensuring greater financial inclusion and sustainability of remittance inflows. Assessing aid-for-trade initiatives and building necessary infrastructure and institutions are equally crucial for long term development of the economy.