New Determinants and socioeconomic impact of remittances … · 2020. 1. 24. · Akbar, Jahangir,...

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Munich Personal RePEc Archive Determinants and socioeconomic impact of remittances between Bangladesh and Italy- A multivariate analysis of religion of rural households Kazi Abdul, Mannan and LJ, Fredericks Southern Cross University, UCSI University 2015 Online at https://mpra.ub.uni-muenchen.de/97467/ MPRA Paper No. 97467, posted 05 Jan 2020 05:22 UTC

Transcript of New Determinants and socioeconomic impact of remittances … · 2020. 1. 24. · Akbar, Jahangir,...

  • Munich Personal RePEc Archive

    Determinants and socioeconomic impact

    of remittances between Bangladesh and

    Italy- A multivariate analysis of religion

    of rural households

    Kazi Abdul, Mannan and LJ, Fredericks

    Southern Cross University, UCSI University

    2015

    Online at https://mpra.ub.uni-muenchen.de/97467/

    MPRA Paper No. 97467, posted 05 Jan 2020 05:22 UTC

  • Mannan and Fredericks 22

    Determinants and socioeconomic impact of remittances between

    Bangladesh and Italy: A multivariate analysis of religion of rural

    households

    Kazi Abdul Mannan1

    Research Fellow

    Southern Cross University, Australia

    and

    Prof. Dr. L.J. Fredericks

    Faculty of Business and Information Science

    UCSI University,

    Malaysia

    ABSTRACT

    This paper analyses the influence of religious differences amongst 10 villages on the remittance

    determinants and their socioeconomic impacts in remittance-receiving households in rural

    Bangladesh. Using micro-economic data from a survey conducted in 2013, multivariate analysis

    was carried out on 300 rural households. The empirical findings show that the remittance

    determinants (migrant age, marital status and number of visits; household head age, marital

    status and employment status) and impacts (saving and investment patterns) vary from religion

    to religion at the same community level of the households. The study suggests that the strong

    religious differences in the remittance behaviour of Bangladeshi households and highlights the

    importance of differentiating religious backgrounds when analysing the determinants of

    remittances.

    Key Word: remittance, determinants, socioeconomic, impact, multivariate, religion, rural household

    1 Corresponding author, Kazi Abdul Mannan, Research Fellow, Southern Cross University,

    [email protected]

  • Mannan and Fredericks 23

    INTRODUCTION

    Bangladeshi migrants in Italy are predominantly single and male migrants who are living under

    ‘transnationally split’ (Yeoh, Graham, and Boyle, 2002) conditions and obligated to maintain economic and social relations with their family members back home (Rahman and Kabir, 2012). The

    obligation of maintaining sustained economic and social ties with home stems from the dominance of

    the household in the social and economic affairs of the Bangladeshi society and their transnational

    household members. Individual migrant is deeply enmeshed in a complex web of household relations

    and dependencies: He/she moves internationally for work as an envoy of the extended household that

    places the well-being of the extended family above the individual migrant’s interests (Rahman, 2011). Whether it is temporary labour migration such as migration to the Middle East or more permanent

    form of migration such as migration to Italy, maintaining sustained economic relations with left

    behind households remain one of the key priorities for migrant members (Ullah, 2010, Rahman 2009).

    This is comprehensive evidenced in the annual inflow of remittances to Bangladesh, which has

    increased from around $4.2 billion in 2005 to nearly $10.9 billion in 2013 (BMET, 2014).

    These facts and figures indicate that international migration and remittance is an intricate phenomenon, the dynamics of which are increasingly turning a drastic policy topic global economic,

    social, legal and cultural topic.

    RELIGIOUS AND HISTORICAL BACKGROUND

    The Indian Subcontinent has a history and rich in natural as well as geographical beauty such as

    mountains, plains, forests, deserts, lakes, hills, and rivers with different climate and seasons

    throughout the year and of some five millennium years and was spread over the area of one and a half

    millions of square miles (Swarup, 1968). Before 1947, the subcontinent includes Bangladesh, India

    and Pakistan, nowadays the three independent countries and nations. The aggressors were the Aryans,

    the Dravidians, the Parthians, the Greeks, the Sakas, the Kushans, the Huns, the Turks, the Afghans,

    and the Mongols (Singh, 2008) who all brought their own cultures and religions with them and the

    ligature gave grow up to a new Indian Civilization.

    In the 6th Century B.C two new religious movements, Jainism led by Mahavira and Buddhism led by

    Buddha (Sen, 1988). Alexander invaded the Punjab state of the region in 327 – 26 B.C and linked India with Iranian Civilization (Gordon & Walsh, 2009). Kushans (A.D. 78 – 123) tribe extended the empire to include Kashmir, Upper Sindh, Bihar. Even beyond India towards Hindukush, Herat, Kabul,

    Ghazni and Kandhahar provinces of Afghanistan and Seistan and Balochistan. Kanishka changed the

    face of the by converting it to theistic (Thaper, 2002). The Guptas Emperors (A.D. 319 – 510) ruled over Gujrat, Kathiawar, Deccan, Bengal, Assam and hilly districts of Garhwal and Kangra and some

    of the tribal states of Punjab (Prakash, 2005).

    First Arab Muslim to capture the lower Indus valley was Muhammad bin Qasim who opened the way

    for Umayyad Caliphs to enter in the region. After nearly three centuries, in the 10th century came

    Seljug Turks from Central Asia, they got hold of the region as the Indians were ill-organized and there

    was no political integrity (Annemarie, 2004). The victory of Muslims over the region had resulted in

    building their empire in the Punjab, the Gangetic plains and the Bengal and subsequently down till

    Mysore and Delhi. The Hindus thought that this race will also be merged into their religion but the

    Muslims were proud of their religion and culture and soon Islam and Muslims were accepted in the

    social and religious life of the people (Annemarie, 2004).

  • Mannan and Fredericks 24

    Iltutmish, Balban, Khiljis, Tughluqs and other Muslim Sultanates were ruled over by the Turkish

    Mughals who came to India in 1526 under Babur rule. The North India, the South remains under the

    rule of Hindus and the Cholas Empire remains from 985 to the middle of the thirteen century and

    spread over the northern Ceylon, Bengal, Burma, Malay and Sumatra. This regime was also run over

    by a Muslim Sultan Alauddin Khilji who came from the North in early 14th century (Richard, 1995).

    The Mughals who came in 1526 in Delhi under Babur rule, were Turkish nationals but were very

    Iranian in Culture and religion. Akbar, Jahangir, Shahjahan and Aurangzeb Alamgir (A.D. 16581707)

    were the successors of the Mughal emperor Humayon (Richard, 1995).

    The European came to India from the route of the sea. First to come were the Portuguese traders, then

    subsequently came the British, the French and the Dutch. The British were the most successful in

    extending superiority in colonial contest and till 1803 became the real supreme power of the whole of

    India. The British after suppressing the independence war of India in 1858, took the complete

    administrative hold of the country. The new generation also tends to incline towards the western

    culture and the outbreak came with the independence of the region from the British in 1947 and the

    emergence of two independent states; India and Pakistan.

    A British Settlement Officer of British India in 1910, J. C. Jack, wrote a book entitled ‘The Economic Life of a Bengal District’ (Jack 1917). Jack provided a comprehensive description of the economic, religion and social life of Greater Faridpur (which is now divided into five districts namely Faridpur,

    Rajbari, Gopalganj, Madaripur and Shariatpur) on that period. According to Jack, 62.5 percent of the

    people in Greater Faridpur were Muslims, whereas the Hindu population was 37 percent and others

    (mainly Christians) were only 0.5 percent. Over the past 100 years, the share of Hindu population

    declined and that of Muslims increased quite substantially.

    According to the HIES (2005), substantial variations between districts in Greater Faridpur. Faridpur,

    Gopalganj, Madaripur, Rajbari and Shariatpur districts have Muslim populations of 93% , 93% , 74%,

    66%, and 72%, respectively. During partition of Inadia and Pakistan, and with the rise of Pakistan in

    1947, an enormous number of Hindu people migrated to India (Raihan, 2011). The Pakistani regime

    (1947–1971), because of feelings of insecurity and victims of racial discrimination by the state against the Hindu population, the intensity of migration to India continued (UK Border Agency, 2012).

    Imposition of the ‘Enemy Property Act’ after the war between Pakistan and India in 1965 resulted in a large-scale possession of the properties of the Hindu population by the Muslim elite society

    (Manchanda, 2013).

    In 1971 (During the War of Independence), the Hindu population was particularly targeted by the

    Pakistani army (alliance) and that resulted in an enormous killing rate and a outward migration of the

    Hindu population (Hindu American Foundation, 2009). The ‘Enemy Property Act’ was changed cover as the ‘Vested Property Act’ after 1971, when Bangladesh gained Independence; though, unfortunately, the discriminatory effects of the act continued during the Bangladesh regime (Raihan,

    2011).. Barkat (2000) explored that the Vested Property Act was the single largest cause of migration

    of Hindus from Bangladesh, and 2.01 million acres, comprising 45 percent of the land owned by

    Hindus, was lost due to this Act. In spite of fact that there were attempts to amend the law, a very

    little has changed.

  • Mannan and Fredericks 25

    MIGRATION AND RELIGION

    Bangladesh is not a secular country, although religion does play a vital role in migration (Datta, et al.,

    2003). Before independence in 1971, the political factor was the main reason for migration and

    migration caused by political factor enforced Hindu migration most (Datta, 2004). But both political

    and economic factors were the underlying causes of migration for pre and post 1971, particularly the

    period in 1990’s to onwards, the reason for migration again has been political including insecurity of life and property of the minority community and this led to the Hindu migration more (Islam, 2011).

    When the reason has been economic, the migrants were both Muslims and Hindus (Kumar, 2009).

    OBJECTIVE OF THE STUDY

    Based on the research questions this research has three objectives.

    1. To examine the socio-demographic profile of religious difference between Muslim and Hindu of

    the Bangladeshi households receiving remittance from their family members working in Italy.

    2. To explore the factors influencing the amount of remittance sent by household members working in

    Italy to their homes in Bangladesh.

    3. To investigate the socioeconomic impact of such remittances of both religions on the households in

    Bangladesh.

    METHODOLOGY

    This study chose a quantitative method approach as its methodology to accommodate method for an

    extensive solution of the research problem and answer the research questions. Below Table 1 has

    specified the analytical tools and method pertinent to the research objectives and questions of this

    study.

    Table 1: Analytical methods applied to answer the research questions of this study

    Objective Research question Analytical method

    Tool

    1. To examine the socio-demographic profile of religious difference between Muslim and Hindu of the Bangladeshi households receiving remittance from their family members working in Italy.

    Does socio-demographic profile differ due to religion of remittance receiving household members in rural Bangladesh?

    Quantitative Survey questionnaire

    2. To explore the factors influencing the amount of remittance sent by household members working in Italy to their homes in Bangladesh.

    What are the remittance determinants influencing the amount of remittance sent by household members working in Italy to their homes in Bangladesh?

    Quantitative Survey questionnaire

    3.

    To investigate the socioeconomic impact of such remittances of both religions on the households in Bangladesh.

    What is the socioeconomic impact of such remittances of both religions households in Bangladesh?

    Quantitative Survey questionnaire

  • Mannan and Fredericks 26

    Selection of survey village and course of the survey

    In line with the study focus, the selection of the study area in Bangladesh was based on the high

    incidence of household members migrating to Italy at the sub-district level (Upazila) and the

    prevalence of remittance-receiving households at the sub-sub-district level (Union Parisad).

    Shariatpur is located in the Dhaka division and in the greater Faridpur District. Among the

    households, a significant number of migrants are from Naria Upazila, Shariatpur District. Naria sub-

    district has 14 sub-sub-districts and Vogeshore union one of the sub-sub-districts, has been selected

    randomly for census data because there is no available published data on Bangladeshi migrant

    workers in Italy. Emigration from Bangladesh to Italy is predominantly a rural phenomenon.

    Therefore, the fieldwork undertaken for this research consists of an ethnographic village study in

    Bangladesh with particular reference to remittance sending migrant worker in Italy to bridge the

    micro and macro paradigms of migration and remittance, and offer analytical insights into the

    determinants and impacts of such remittance. In selecting a representative sample of the population,

    Krejcie and Morgan’s (1970) recommendation was accepted in this study. After categorising the household migrant members in Italy a random sample of 300 households was selected, the share in

    each village corresponding to their proportion in the whole population (the remittance received

    household).

    Ethical Issues

    This research was conducted in compliance with the National Statement on Ethical Conduct in

    Human Research (2007) and was approved by the Human Research Ethics Committee of Southern

    Cross University (Approval Number ECN-13-141).

    Econometric model building and multivariate analysis

    The long and short regression allows the assessment of the direction and strength of causality existing

    between the dependent and independent variables. The best fit model has statistically been developed,

    both (short and long) regression models are applied in the data analysis because whole sample has

    been broken into sub-samples with specific attributes (e.g., marital status of migrant, employment

    status of household head, household relation to migrant, gender of household head, etc.) to generate a

    clear picture about the factors influencing the remittances of those specific study households.

    Therefore, the regressions are:

    RmY= 𝛼 + 𝛼1 AGEm + 𝛼2 EDUm+ 𝛼3 MARSm+ 𝛼4 YMIGm + 𝛼5 LEGSm + 𝛼6 NVISTm + 𝛼7 AGEhh + 𝛼8 GENhh + 𝛼9 MARShh + 𝛼10 EDUhh + 𝛼11 RELhh + 𝛼12 EMPShh + 𝛼13 RELMhh + 𝛼14 HHsize + 𝛼15 HLOWtitle + 𝛼16 Invest_Fin_Sec + 𝛼17 Invest_Hous_Dev + 𝛼18 Ln_Live_Exp + 𝛼19 Ln_HH_Incom + 𝛼20 Inest_Busi + 𝛼21 Ln_Welf + 𝛼23 Loan_Rep +e1 ----------------------------(1.1: Long regression) and

  • Mannan and Fredericks 27

    Table 2: Specification of variables for multivariate analysis, Equation (1.1)

    Source: Author developed for this study

  • Mannan and Fredericks 28

    RmY= 𝛼 + 𝛼1 AGEm + 𝛼2 MARSm + 𝛼3 NVISTm+ 𝛼4 AGEhh+ 𝛼5 GENhh+ 𝛼6 MARShh+ 𝛼7 EMPShh+𝛼8RELMhh + 𝛼9 Invest_Hous_Sec+ 𝛼10Ln_Land+ 𝛼11 Ln_Live_Exp+ 𝜋1………………………………………………..(1.2: Short regression) The identification of all these variables are given in Table 2 with the exception of the error terms e1

    and 𝜋1 which satisfy the assumptions of- (i) zero mean, E(e1)=0; E(𝜋1)=0 (ii) constant variance, E(e1)2=𝜕e2; E(𝜋1)2=𝜕𝜋2 (iii) no autocorrelation exist in the error e1 and 𝜋1 ; E(e1j)=0 and E(𝜋1j)=0; where 1≠j RESULTS

    The cross tabulation of the 300 household participants survey response about the remittance receiver

    religious status and remittance indicates in the table 3 and the results shows that the majority (68.0%)

    household head were Muslim while Hindu (32.0%). Both of the religious status (Muslim and Hindu)

    household head were received various ranges of remittances. The 3% of Muslim household head were

    received the highest range of remittances BDT 14,00,001 to 15,00,000 while the Hindu household

    head BDT 11,00,001 to 12,00,000 which also 3%.

    Table 3: Cross Tabulation Household yearly remittance received and religion of household head

    Source: Developed from the survey data

  • Mannan and Fredericks 29

    However, as depicted in the figure 1 indicates that the Muslim household highest (1%) remittances

    range BDT 14.00.001 to 15, 00,000 and maximum percentage of (24%) household were received

    BDT 500,001 to 600,000 yearly remittances from their migrant household members at the destination.

    Figure 1: Distribution of Muslim remittance receiving household

    Source: Developed from the survey data

    While figure 2 explore the Hindu household highest (3%) remittance range BDT 11,00,001 to

    12,00,000 and maximum percentage (31%) yearly received amount were BDT 6,00,001 to 7,00,000.

    Figure 2: Distribution of Hindu remittance receiving household

    Source: Developed from the survey data

  • Mannan and Fredericks 30

    Remittance frequency table 4 show that the Muslim household were received remittance bimonthly

    (52.94%), monthly (23.53%), at necessary (22.06) and festivals (1.47%) while Hindu household

    bimonthly (65.63%), at necessary (21.86%) and monthly (12.5%).

    Table 4: Remittance frequency distribution

    Source: Developed from the survey data

    At the long regression model table 5 explores the statistically significance determinants of remittance

    of Muslim household were marital status of migrant, number of visit by the migrant, age of household

    head, household head relation to migrant, household title of land, investment in housing development,

    investment in land and household living expenditure. On the other hand, Hindu household were age of

    migrant, education of migrant, marital status of migrant, number of visit by the migrant, age of

    household head, education of household head, employment status of household head, household head

    relation to migrant, household size, household land, household living expenditures, household yearly

    income, household welfare expenses and loan repayment. R2 and adjusted R2 square values for

    Muslim and hindu show respectively (0.732 and 0.917) and (0.683 and 0.888).

  • Mannan and Fredericks 31

    Table 5: Long regression model result

    Source: Developed from the survey data

    However, at the short regression (model fit) Table 6 show the significance determinants of Muslim

    household were age of migrant, number of visit by the migrant, age of household head, gender of

    household, marital status of household head, employment status of household head, household head

    relation to migrant, investment in housing development and household living expenditure. On the

    other hand, Hindu household were age of migrant, marital status of migrant, number of visit by the

    migrant, gender of household head, household head relation to migrant, investment in housing

    development, household living expenditures. R2 and adjusted R2 square values for Muslim and Hindu

    show respectively (0.720 and 0.692) and (0.704 and 0.655).

  • Mannan and Fredericks 32

    Table 6: Short regression model results

    Source: Developed from the survey data

    Uses of remittance by the Muslim and Hindu Table 7 explores that both 100% participants households

    use for consumption. Both religions almost nearest percentage of uses of remittance were repayment

    of loan, education, health telecom, renovation of house, gift and donation, social ceremonies, durable

    purchase, jewellery, fishing and others. The Muslim household were invested homestead land,

    agricultural land, non-agricultural land commercial land, farm and livestock while none of Hindu

    household was invested such sectors. On the other hand, the Hindu households were invested in

    business (78%), capital market (75%) and seasonal business (78.1%) while Muslim household were

    36.8%, 23.5% and 41.2% among the sectors respectively.

  • Mannan and Fredericks 33

    Table 6: Uses of remittances

    Source: Developed from the survey data

    Socioeconomic impact of remittance for the both religions revel table 8 which were greatly extended

    to their households. Both religions were almost same percentage extended with the key indication

    except saving of the households. The Muslim household show 3.9% household saving were greatly

    extended while none of the Hindu household.

    Table 8: Socioeconomic greatly extended

    Source: Developed from the survey data

  • Mannan and Fredericks 34

    However, table 9 explores the Pearson correlation with 1% level of significance that age of migrant

    and number of visit by the migrant highly significant to the socioeconomic impact of remittance.

    Table 9: Pearson Correlation table for Muslim household (N-204)

    Source: Developed from the survey data

    While table 10 indicate for the Hindu household and the results show that the 1% level of confidence

    marital status of the household head and 5% level of confidence number of visit by the migrant and

    age of household head highly significant to the socioeconomic impact of such remittance to the

    households.

    Table 10: Pearson Correlation table for Hindu household (N-96)

    Source: Developed from the survey data

    DISCUSSION

    According to the HIES (2005), the study area Muslim and Hindu population ration 72:28 and the

    present study revel that the ratio of migrant household 68:32. This indicates that the 4% Hindu

    population migrated to Italy than their actual size of population. This could be happened because of

    their religious and social network to help each other. Yearly highest remittance ranges differ between

    the two religions as well as average range. Both are new findings in the remittance literature.

    The results revel that the Muslim household receive remittance during the festivals while none of

    receive to their festivals. Usually, Muslim enjoyed to big festivals (religious) which are Eid-ul-fitar

    and Eid ul Adjah while Hindu of the study area Durga puja. Most of the Hindu household of the study

    area has spatial household member in India. Usually they like to enjoy religious festival with spatial

  • Mannan and Fredericks 35

    household member in India. Therefore, the migrant member could be sent partial remittance to their

    spatial household member in India.

    Migrant marital status and residency pattern of household members, including spouse and children are

    significant determinants of remittance motivation (Johnson and Whitelaw 1974; Menjivar et al. 1998;

    Vanwey 2004; Casale and Posel, 2006; Luke, 2007; Alba and Sugui 2009), it also vary single

    migrants and married heads living status (Sahu and Das, 2009), with gender discrimination (Sorenson,

    2004a, 2004b, 2005; Atekmangoh, 2011), with the number of nuclear household members living

    outside the household (DeVoretz and Vadean, 2007). The present study finds the marital status of

    migrant also significant determinants of remittance but the significance depends on religious factor of

    household. The study revel that the study area, migrant marital status is only significance for Hindu

    household.

    The age of household head factor vary from country to country (DeVoretz and Vadean, 2008), gender

    behaviour in the remittance motive, for example male household less like to receive remittance rather

    than female (McDonald and Valenzuela, 2012), the older household head receive more remittance

    than the younger household head which reveal that the adult children care for their old parents as well

    their grant parents (Germenji et al 2001). The current study also finds that the age of household head

    is one of the key determinants of remittance. But there is significance difference between the two

    religions household where Muslim households are significant while Hindu are insignificant.

    Marital status of the households head one of the key demographic characteristic influence to receive

    remittances. Empirical study shows that the households with married head tend to receive

    comparatively lower remittances across the year, whereas remittances flow to widow and otherwise

    not married relatively higher, however the female-headed households receive more remittance

    specially those who are married ( Pfau, 2008). In this study also find factor influencing determinant of

    remittance in the rural household but there is discrimination between the religious believe of the

    household. The study revel that the Muslim households are highly significant while Hindu households

    are insignificant.

    The households head employment status play vital role in remittance behaviour (Quartey, 2006),

    there are few sectorial differences, for instance, the household head employment in public sector,

    private formal sector, export farmer, crop farmer, private, informal and unemployment play different

    impacts. However, none of study delves out distinguish of two religious value of household. This

    study finds the difference between the Muslim and Hindu households remittance behaviour with the

    employment status of household head. The Muslim households are statistically significant while

    Hindu households are insignificant.

    Usually remittances are used by the left behind household members are various sectors like 28%

    luxurious life style, welfare sector, loan repayment, housing, financial investment, business sector,

    healthcare, consumption, children education, agro based sector, land buying and also for others. This

    study also finds almost similar outcomes with other studies. However, the study revel new finding that

    there is discrimination in remittance use due to religious nature of household at the origin. The

    Muslim household were invested homestead land, agricultural land, non-agricultural land commercial

    land, farm and livestock while none of Hindu household was invested such sectors. On the other hand,

    the Hindu households like more investment on their regular business, capital market and seasonal

    business while Muslim household are less. This long term and short-term nature of investment could

    be happened due to historical background of religious fact which has stated at the beginning of this

    subcontinent.

  • Mannan and Fredericks 36

    Socioeconomic impact of remittance for the both religions revel that the Muslim household more

    likely to keep their money in savings for future while Hindu household are less likely to keep saving

    account. However, in case of Muslim households, the age of migrant and number of visit by the

    migrant highly significant to the socioeconomic impact of remittance. While the Hindu household

    marital status of the household head, number of visit by the migrant and age of household head highly

    significant to the socioeconomic impact of such remittance to the households. Both religions are

    common variable is the number of visit by the migrant but the other variable vary from each religion.

    This could be explained that the age of migrant in the Muslim households are relevant to social,

    economic and cultural involvement in the community. While marital status for the household head at

    the Hindu household is vital factor due to decision making process.

    CONCLUSION

    The present study investigated the religious variation of remittance determinants and their

    socioeconomic impact in rural area at the origin. The findings provided valuable discrimination

    between the religious believe of the households. The household unit analysis show that remittance

    determinants vary from religion to religion at the same community level of households. Moreover, the

    remittance consumptions and used also differ between the religions. Furthermore, relationship

    between the socioeconomic impact from remittance and demographic determinants also vary due to

    the religious discrimination among the same rural area at the origin country.

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