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Since 2008, Nepal has been consistently ranked as one of the top ten remittance recipient countries in the world when remittances are measured as a share of gross domestic product (GDP). In fact, among the countries receiving remittances as a proportion of GDP, Nepal stood second in 2016, first in 2015, and third in 2013 and 2014. However, despite this fact, the empirical evidence on how remittances impact financial inclusion - household's access to and use of formal financial services - in Nepal remains scarce. In this paper, we attempt to fill this gap in literature. In particular, we examine whether remittances have an impact on the likelihood of households: i) having an account at a formal financial institution; ii) having an outstanding debt; and iii) purchasing loan products from a formal financial institution. This question is important because financial inclusion has been shown to foster inclusive growth and economic development (see Demirgüç-Kunt & Singer, 2017 for related empirical evidence).

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Oct 26th, 12:00 AM

Remittances and Financial Inclusion: Evidence from Nepal

Since 2008, Nepal has been consistently ranked as one of the top ten remittance recipient countries in the world when remittances are measured as a share of gross domestic product (GDP). In fact, among the countries receiving remittances as a proportion of GDP, Nepal stood second in 2016, first in 2015, and third in 2013 and 2014. However, despite this fact, the empirical evidence on how remittances impact financial inclusion - household's access to and use of formal financial services - in Nepal remains scarce. In this paper, we attempt to fill this gap in literature. In particular, we examine whether remittances have an impact on the likelihood of households: i) having an account at a formal financial institution; ii) having an outstanding debt; and iii) purchasing loan products from a formal financial institution. This question is important because financial inclusion has been shown to foster inclusive growth and economic development (see Demirgüç-Kunt & Singer, 2017 for related empirical evidence).