Does Remittances Alter Saving and Borrowing Behavior of Family Left Behind?

Author Name

Bilesha Weeraratne

Author Address

PhD. Institute of Policy Studies of Sri Lanka [email protected]


Remittances, Savings, Borrowing, Sri Lanka, Migration


Migration is an important component of the Sri Lankan economy. Despite its potential, in Sri Lanka migration often results in unsustainable socio-economic progress of migrants and their households. In this paper I investigate the causal impact of migration on savings and borrowing behaviour of left behind members in migrant households and its change over time.  The study adopts a propensity score matching methodology and using data sources from two time periods  - Consumer Finance and Socio Economic (CFS) Survey 2003/4  conducted by the Central Bank of Sri Lanka and Household Income and Expenditure Survey (HIES) 2012/13 conducted by the Department of Census and Statistics of Sri Lanla.  Findings for 2003/4 show a negative causal effect of migration on informal savings and total borrowings.  This lower level of savings and borrowings caused by migration provide initial quantitative evidence in support of the hypothesis that migrant households thrive while migrant is at destination, but their socioeconomic progress dwindles with the return of the migrant and the end of the inflow of remittance stream. The principal agent problem and the associated moral hazard between migrant and left behind family hinder the realization of full potential of migration.

The remaining work of the study would focus on a similar analysis for 2012/13 HIES data and a comparative analysis of findings for the two data periods to discern the time dynamics of the causal impact of migration on financial behaviour of left behind members in migrant households. The findings of the study are valuable for evidence based policy formulation.


International Conference on "Global Migration: Rethinking Skills, Knowledge and Culture"
© 2012-20 GRFDT, All Rights Reserved.Maintained by GRFDT.Designed by Abhinav Jain