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Role of Remittances in Financial Market Development in The Countries of The Gulf Cooperation Council - Thesis Proposal Example
This paper discusses current state of financial market development in the countries of Gulf Cooperation Council, and the impact of large amount of remittances in the region on the financial markets. Despite oil wealth the financial markets in the countries are deemed not fully satisfactory…
This research will focus upon exploring and understanding the link between remittances and financial market development in GCC region. Research studies suggest that the remittances can have an impact on the development of financial markets of host countries. Specifically, remittances can result into increase in competitiveness as well as reduction in the transaction costs for the consumers.
By assisting institutions to become competitive by facilitating remitters through innovative product design and low costs, financial institutions can actually improve their own efficiency and develop in more sophisticated manner. With the introduction of technology, cost of sending remittances has reduced thus providing incentives to the remitters to use formal channels for the purpose of remitting money.
GCC region is an oil rich region and its financial market development is necessary for its development and growth in long run. It is making development towards strengthening its financial markets by implementing common currency, monetary union as well as integration of its stock exchanges.
Recently, remittances have formed one of the significant portions of the international capital flows. Financial liberalization has resulted into better capital flows with expat easily sending funds to their home countries. It is critical to understand that for developing countries especially remittances form a significant part of the international capital flows and is also one of the most important sources of foreign exchange for developing countries.