Remittances, investment and savings: A comparative analysis across different regions of Bangladesh / Sarah Salahuddin

Sarah , Salahuddin (2022) Remittances, investment and savings: A comparative analysis across different regions of Bangladesh / Sarah Salahuddin. PhD thesis, Universiti Malaya.

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Abstract

Remittance is a crucial aspect of the socio-economic advancement in developing countries like Bangladesh. Over the years, the increasing flow of remittances due to international migration has contributed to Bangladesh’s national development. However, research have showed that instead of investing in the productive sector, remittance-receiving households’ mostly spend on conspicuous consumption and status-oriented consumer good simplifying that a very meagre portion of the remittance is channeled towards savings and investment. However, optimal allocation of remittances to investment and savings is essential for sustainable economic growth and smoothing of intergenerational consumption. Therefore, this study aims to identify the significant role of remittances, on household investment and savings, using data from 10,451 households from Bangladesh. The objectives are threefold. The first two objectives attempt to uncover the association between remittances, investment and savings in Bangladesh using the data of investment and savings made by the remittance-receiving households. The third objective seeks to identify the differences in the investment and savings of households across seven regions in Bangladesh. The study is based on a cross-sectional survey data set, “Survey on Investment from Remittances” or (SIR, 2016), collected from the Bangladesh Bureau of Statistics (BBS). The OLS regression analysis revealed that remittance inflow is a significant predictor of investment and savings at the household level in Bangladesh and positively impacts different kinds of investment and savings. The result of the study also showed that the highest portion of remittance was spent on housing investment, while, in terms of savings, the highest percentage was devoted to opening a savings account. Male headed households played a more efficient role in increasing the level of investment and savings. Household heads without education tend to invest more compare to the household heads with education. Remittances have a significant positive impact on different investment categories and savings across the regions, except for few exceptions. Regional analysis showed that housing investment secured the first position in Chittagong and Sylhet, and Dhaka made the highest total investment. Irrespective of the demographic characteristics of the household head, remittance-receiving households preferred to invest in land, business, agriculture and livestock and other kinds of investment. Although a maximum number of households in all the regions opened a savings account where Chittagong pursued the highest total savings. Besides remittances, gender and education of the household head played the most important role in determining the types of investment and savings undertaken in most of the regions.

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