DYNAMIC IMPACT OF REMITTANCES ON POVERTY, INEQUALITY, HUMAN DEVELOPMENT AND FINANCIAL DEVELOPMENT: EMPIRICAL EVIDENCE FROM ASIAN COUNTRIES

Abstract

This study examines the dynamic and nonlinear effects of remittances on poverty, income inequality, human development and financial development across 37 Asian countries during 1990–2022. Using the System-GMM, the analysis addresses endogeneity, persistence and unobserved heterogeneity while examining the moderating role of institutional quality. The results show that remittances significantly enhance financial and human development by improving access to education, healthcare and formal financial services. Remittances also reduce overall income inequality and exhibit a nonlinear U-shaped relationship with poverty, indicating that they initially alleviate poverty, but their poverty-reducing effect weakens beyond a threshold. Furthermore, remittances increase inequality among lower-income groups while reducing inequality among higher-income groups, highlighting heterogeneous distributional effects. Stronger institutional quality further amplifies the positive developmental impacts of remittances. These findings emphasize the importance of effective governance, financial inclusion and policies that promote the productive use of remittances to achieve sustainable and inclusive development in Asian economies. © 2026 The Authors.