Moral Financial Exclusion of International Migration. An Empirical Analysis.

Financial Exclusion (FE) is a main cause of social exclusion and it generates poverty, deprivation and inequality. The fight against FE is present in all government agendas and it has fostered the design of specific products for social groups that suffer high risk of exclusion. Nevertheless, the strategies have not reached the desired impact. FE is a complex construct and its causes require further study and analysis. This paper delves into financial self-exclusion, which has remained almost unexplored by socio-economic literature. Specifically, we analyze moral self-exclusion and the relationship with religious traditions. Using a dataset that comprises 51 countries, we explore whether moral and religious factors –beyond pure economic incentives– could explain the detachment from formal financial institutions in the case of migrants that send remittances to their home countries. In 2014 these flows amounted to $436 billions. Our analysis shows that adherents to Islam self-exclude themselves from the formal financial system for moral motives and not because of economic reasons, whereas in the case of other religious traditions the economic incentives are imperative. The ethical judgment on the rules governing the formal financial system by religious traditions like Islam would explain the reduced impact of policies for financial inclusion.