Sarah Hirsch



Dissertation subject (working title):

"Remittances and barriers to financial access - A theoretical analysis and some empirical evidence from the case study Honduras"

Remittances, the money labor migrants send back to their families in their home countries, have grown to an estimated $ 325 billion worldwide in 2010. Latin America is one of the major remittances-receiving regions in the world; Mexico is the third largest recipient of remittances in absolute numbers and both Honduras and El Salvador have made it to the top 10 list of remittances-receiving countries in relation to their GDP (Mohapatra et al. 2010). This private to private flow of money has been credited with great potential for development in the recipient countries, which are often poor and lack capital to finance development. One such potential for development is the financial inclusion of remittances receivers, the argument being that the migrant’s family can save for bad times or that remittances can function as a guarantee for extending credit for productive investments.

However, many issues concerning the access to finance for migrant families remain unclear. Although remittances often promote the first contact between a financial institution and the remittances receiver, this opportunity to cross-sell other financial products and services is not always successful and existing research confirms that the majority of remittances receivers do not have a relationship with a formal financial institution. The present research will therefore address the following questions: What barriers prevent access to finance for migrant families and how are these barriers affected by remittances? How have remittances affected financial access in Honduras?