Abstract
The United Nations (UN) development program sets a target to minimize the fees of sending money home to a level of 3% of the remitted amount. This study investigates the determinants of bilateral remittances from GCC to South and East Asia, with an emphasis on the cost of remitting. We use thirteen years of data covering 2010 to 2022. We applied panel data techniques such as the fixed effect model. We further cope with endogeneity using the instrumental variable (IV) technique. We use World Bank data for the variables of interest (bilateral remittances and the price of remittances). The findings show that a decrease in remittance costs by 10% significantly improves bilateral remittances in the studied corridors. It implies that cost is a key factor influencing the remittance amount for a country. This study shows that local currency depreciation against the US dollar results in higher transactions of remittances in local currency. Important and practical implications for policymakers suggest that cost reduction policies help to remit higher amounts for destination countries and increase the role of banks in the market. The novelty of this study lies in the significance of remittance flows in the GCC-South and East Asia corridors.