Bangladesh Bank Training Academy Journal

Abstract

The economy of Bangladesh is leveraging remittances as one of the most important sources of foreign currency inflow into the country. The inflow of remittances helps Bangladesh to maintain an economic-shock resilient foreign exchange market leading to a stable exchange rate of the local currency which in turn ensures smooth foreign trade of the country. Exploring the micro determinants of remittance inflow of Bangladesh can be useful to understand the dynamics of remittance inflow better which consequently should guide us to take proper measures for the smooth inflow of remittances. This paper is an effort to determine the relationship between remittances inflow and its micro determinants especially expatriates’ human capital represented by the level of education. Besides human capital, the paper also examines the impact of expatriates’ age, sex, host country, occupation, number of years spent abroad, etc. on the remittances inflow of Bangladesh. The necessary analysis of this researchis based on the Ordinary Least Square (OLS) method. The source of the cross-sectional data is the Bangladesh Bureau of Statistics (BBS) conducted Household Income and Expenditure Survey (HIES), 2010. The final sample size became 1406 after necessary data cleaning. The paper estimates three different models to find the best one to serve the purpose of the research. The finding of the paper shows that given a one-year increase in education year, we can expect the remittance inflow into Bangladesh to increase by 2.19 percentage. For the age variable, given a one-year increase in the age of expatriates, we can expect the remittance inflow to increase by 1.11 percentage.