Review article
THE REMITTANCE INFLOWS’ IMPACT ON SAVINGS IN THE SERBIAN ECONOMY
Irena Jankovic
Mirjana Gligoric
Abstract
Remittance inflows represent one of the most significant sources of foreign funding for most developing
countries. These funds have also proven to be one of the most stable sources of external financing for
developing countries during the past few decades and in the period of the last global crisis. They are
much less responsive to economic cycles and economic shocks than foreign direct investments and
other private and official capital flows. The benefits that a developing country can have from stable cash
inflows are various as far as they are directed in activities that contribute to economic growth and
development. Theoretically, channeling remittances into savings and investments can lead to long-term
economic growth. Formal transfer of remittances through the banking system and financial markets can
lead to stronger financial stability and development of new financial instruments. Since remittances
reduce the volatility of GDP and may contribute to financial system development they are able to
additionally boost country's growth and development. Finally, these resources significantly contribute to
the fight against poverty and inequality. Taking into account all the positive impacts the remittances
may have in developing countries, the goal of this paper is to investigate in further detail the
relationship between remittances and savings in Serbian economy. With this analysis, we aim to test
whether there is a potential for remittance inflows channeling not only in consumption, but also in
various investment alternatives that could provide long-term benefits to the local economy.
Keywords
Economic Growth and Development; Financial Sector; Investments; Remittances; Savings
Hrčak ID:
123666
URI
Publication date:
30.6.2015.
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