Role of Remittances in Financial Market Development in The Countries Thesis Proposal

Role of Remittances in Financial Market Development in The Countries of The Gulf Cooperation Council - Thesis Proposal Example ess has been undertaken by the GCC countries and whether consistent and increased remittances outflow from these countries effectively contribute towards the financial development of the region. More specifically, this research aims to achieve following objectives: 1. To evaluate the overall process of financial market development in the GCC region. 2. Dependence of financial market development process on oil & other resources 3. Dependence of financial market development on the remittances. 4. How remittances can improve the financial development process within the region. The overall objective therefore is to comprehensively understand the process of financial market development, how oil resources are supporting it and what role remittances can play to strengthen and quicken the process of financial development within the region. This research study will also undertake a systematic historical review of the financial market development process also. Literature Review This literature review is divided into three parts i.e. first part will discuss the relationship between financial markets and economic growth, second part will explore the relationships between financial market development and remittances and finally a review of financial market development process in GCC will be discussed. Most of the existing literature on the topic is focused upon understanding the impact of remittances on the recipient countries however; very little emphasis has been placed on the impact on the host countries. Though literature have comprehensively covered the impact of immigrants on the host countries macroeconomic environment however, how the immigrant remittances are going to affect the macro-economy as well as financial market development still need to be explored in systematic... 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.