Remittances and Investment Choices at the Household Level: Empirical Evidence from Bangladesh

Abstract

In developing countries like Bangladesh, foreign capital inflows, such as remittances, are a vital source of funds that can bridge the domestic investment gap. Previous empirical results from developing countries show that remittances are widely consumed and seldom used for investment purposes. Therefore, the objective of this study is to identify the link between remittances and investment at the household level in Bangladesh. Based on a large-scale and nationally representative crosssectional secondary data set of the Bangladesh Bureau of Statistics and employing the ordinary least square (OLS) regression model, this study helps to explore the link between remittances and investment at the household level in Bangladesh. The result of this study reveals that remittances positively affect the housing, land, agriculture, business, and valuable investment decisions at the household level, and significantly impact various types of investment. Therefore, it can be said that in the least developed countries like Bangladesh, remittance does act as credit insurance and works as a riskspreading strategy to secure and increase income and acquire capital for investment. The demographic characteristics of the household head, such as gender and marital status, have a significant impact on household investment.