EVALUATING THE IMPACT OF INTERNAL REMITTANCES ON FINANCIAL INCLUSION-EVIDENCE FROM BOSNIA AND HERZEGOVINA

Research and policy debates on international remittances have grown over the last few decades. As remittances are more stable than all other external flows (foreign direct investments and official development assistance), governments attempt to harness these resources. By contrast, discussion on internal remittances is rather non-existent, mostly because of the lack of statistical data, difficulty to capture the flows through informal channels and lack of understanding of internal remittance importance. It is argued that remittances (both external and internal), as stable sources of income, contribute to savings as well as to increase of financial inclusion of individuals who receives remittances. This paper is expected to provide an answer to the question whether individuals who receive remittance more likely to use bank accounts and other services (e.g. loans, debit cards, credit cards etc.) offered by financial institutions than those who do not receive them. Therefore, this paper aims to address the impact of internal remittance on financial inclusion of individuals in Bosnia and Herzegovina (BiH). As a data source, we use World Banks' Global Findex data set from 2014. We estimate logistic regression models with a set of dummy dependent variables for financial inclusion, i.e. having bank account, having debit card, having credit card, borrowing and savings, and regress them on receipt of internal remittance. It is expected that research results will contribute to better understanding of the relationship between internal remittances and financial inclusion in BiH.