Estimates and economic analysis of informal remittances for Pakistan

While inflow of remittances through informal channels are widely discussed in terms of their opportunity cost for the recipient country and likely instrument of illegal activities, the size of such inflows is indeterminate. Pakistan is on the forefront of global efforts to curb hawala transactions y...

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Bibliographic Details
Published inJournal of the Asia Pacific economy Vol. 28; no. 1; pp. 199 - 215
Main Authors Mughal, Khurrum S., Arby, Muhammad Farooq, Babar, Sakkhi, Ilyas, Saddam, Schneider, Friedrich
Format Journal Article
LanguageEnglish
Published London Routledge 02.01.2023
Routledge, Taylor & Francis Group
Subjects
Criminality
current account
Emigration
Financial services
Hawala
hundi
illegal MVTS
informal remittance
Macroeconomics
Muslims
Regulation
Remittances
Transactions
Saudi Arabia
Pakistan
United Kingdom > UK
United States > US
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Summary:While inflow of remittances through informal channels are widely discussed in terms of their opportunity cost for the recipient country and likely instrument of illegal activities, the size of such inflows is indeterminate. Pakistan is on the forefront of global efforts to curb hawala transactions yet no consistent estimates are available. This study attempts to use an indirect macroeconomic approach to estimate hawala transactions from United State of America (USA), United Kingdom (UK), and Saudi Arabia (KSA) for the period 2010Q3 to 2019Q2. These three countries host around 50 percent of Pakistani emigrants and account for almost 55 percent of total remittances received in Q1FY20. Our estimates show that hawala transactions have significantly declined in Pakistan as percentage of official remittances from all three countries. This demonstrates that the enhanced monitoring, regulations and various policy measures by the Government of Pakistan have proved instrumental in reducing hawala transactions over time.
ISSN:1354-7860
1469-9648
DOI:10.1080/13547860.2021.1879350