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Abstract:
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As Mexico's remittances steadily rises, Mexican migration flow into the U.S. is decreasing. This indicates that migrants are remitting more money than in previous years. With the migrant demographic population unchanged, the exponential growth suggests that other forces are at work. This paper argues that the remittance growth is influenced by the development of the financial industry that has raised competition, reduced transfer fees, and opened new remittance services to allow for cheaper remittance transfers. Though the trend is encouraging to policymakers that support formal remittances, are migrants likely to send more money formally than informally? This study hypothesizes two things: 1) migrants remit more money through formal sectors and 2) among sending options, migrants remit the most money through financial institutions. This paper finds that migrants are likely to remit greater amounts informally, suggesting that transfer costs remain too high for migrants to spend on secured transfers. |