Financial Self-Exclusion for Religious Motives. an Empirical Analysis of Informal Transfer Systems.

Thursday, 2 July 2015: 10:15 AM-11:45 AM
CLM.B.05 (Clement House)
Dulce Redin, University of Navarra, Pamplona, Spain
Reyes Calderon, University of Navarra, Pamplona, Spain
In the XXI Century, the usage of financial services forms an essential part of life in society. The impossibility of access and/or the non-usage of the formers, i.e. Financial Exclusion (FE), generates poverty, deprivation and inequality. Hence, the fight against FE has made a way into all governmental agendas. In the era of globalization and the massive mobility of workers, FE particularly affects the segment of migrants from developing countries (Carbó et al, 2005) who have the need to send remittances to their families back home. In 2014, the flow of remittances received by developing countries accounted for $436 Billion (World Bank, 2014). A substantial share of these remittances is sent through informal channels, which are neither regulated nor supervised. Informal transfers may be due to the FE of migrants due to the presence of barriers of access, condition, price or marketing but also it can be attributed to the voluntary not use of formal financial channels or self-exclusion. Religious, cultural or ethical reasons may explain this phenomenon but they are very difficult to measure.

In a long database for 51 countries, Redín (2015) finds that there is FE in the market for remittances that attends to pure economics reasons; that is, there is a substitution effect between formal and informal channels that is explained by the relatively low price (i.e. the black market premium) that offer the not regulated transfer mechanisms. However, this FE has different importance depending on the religious adherence of migrants and their families. In this paper, following the empirical framework of Redín (2015), we explore whether religious factors explain the deviation from formal financial institutions and therefore financial self-exclusion in the market for remittances. Our conclusions certify that adherents of the Islamic religion do not exclude themselves from the formal financial system because of pure economic issues, contrary to what happens with Christians or Jews.


Carbó, S., E. P. M. Gardener and P. Molyneux (2005), Financial Exclusion, Palgrave Macmillan Studies in Banking and Financial Institutions.

Redín (2015), “The relationship between Formal and Informal Remittance Systems in the light of Financial Exclusion of International Migration”, School of Economics and Business Administration of the University of Navarra Working Paper

World Bank (2014), Migration and Development Brief. Migration and Remittances Team, Development Prospects Group, World Bank.