Banking on remittances: An analysis of Mexican migrants' banking and remittance sending behavior in the United States

It is widely held that formal banking offers many benefits for account holders. For migrants, the relationship between banking status and remittance sending is further assumed to be positive. In this analysis of Mexican migrants' banking and remittance sending behavior in the United States, it is observed that migrants with bank accounts are likely to remit less frequently than migrants without accounts. This finding appears to contradict the optimistic idea that having a bank account would contribute to more frequent remittance sending; income smoothing benefits for remittance receivers in Mexico; and personal finance benefits for both the sender and receiver associated with the financial institution. The study concludes that while remittance sending through U.S. banks holds tremendous promise for delivering the aforementioned benefits, banks are failing to deliver competitive offerings to customers that would promote sending through their channels. A second model finds that unbanked Mexican migrants who desire to open a bank account are likely to remit more frequently than unbanked migrants not interested in opening a bank account, confirming that there is a large market of remittance senders interested in the formal financial system, but yet to be tapped by U.S. banks.