Remittances, Financial Development and Economic Growth in Bangladesh

In Bangladesh, remittances from migrant workers are an important component of national income and a source for financing consumption and investment. This article investigates the relationship between remittances, financial sector development and economic growth in Bangladesh over the period of 1976–2011. In the long run, the inflow of remittances and the expansion of the financial sector drive the growth in GDP, whereas in the short run, remittances act as a shock absorber to income changes.