A new study by the Inter-American Development Bank’s (IDB) Multilateral Investment Fund (MIF) and the Inter-American Dialogue has shed light on the financial behavior of Latin American and Caribbean migrants, finding that there is need for formal savings products for remittance clients.
The IDB said while remittances remain one of the largest cross-border flows to Latin American and Caribbean, totaling more than 60 billion dollars annually, the resources “still contribute little to formal household savings for poor and vulnerable households, highlighting the importance of banking remittance clients.”
The study, “Economic Status and Remittance Behavior among Latin American and Caribbean Migrants in the Post-Recession Period” was commissioned by the MIF and carried out by the Inter-American Dialogue.
It is based on a 2013 survey of 2,000 migrants from countries in Latin America and the Caribbean living in five major US cities.
“Channeling more remittances into the formal financial system, including into savings accounts, would help poor and vulnerable households benefit more from these flows,” said MIF general manager Nancy Lee.
“The MIF is working with remittance clients, particularly women who are important senders as well as recipients, to provide more opportunities to save in formal accounts so that they can invest in education, housing, business creation, and other needs,” she added.
Women in the survey reported increases in the average remittance amount sent and the number of transfers per year, while both the amount and frequency of transfers made by men remained stable.
According to the study, remittances to Haiti, Jamaica and other countries in the Caribbean recovered by 12% since 2009; two-thirds of migrants said they save money in some way, but the majority do so informally, which reduces their potential for building long-term wealth; and while 60% of migrants reported having a bank account in the United States, only one-third of recipients in the region have bank accounts.
The study also found that the economic conditions of migrants from Latin America and the Caribbean have improved modestly since the 2008-2009 financial crisis, but migrants remain vulnerable in terms of income, savings and debt levels.