Evaluating the Impact of Remittances on Household Financial Behavior

Abstract

Remittances are vital sources of income for households in many developing countries. This study examines the financial behavior of households in the Philippines – one of the biggest remittance-recipient countries globally. Using data from the 2023 Family Income and Expenditure Survey (FIES), we examine the impact of remittances on household consumption patterns, economic participation, and savings behavior. Remittance-recipient and non-recipient households differ on several key behavioral metrics. The findings reveal that remittance recipients spend more on necessities, long-term investments, and discretionary expenditures. They also participate less in wage-based employment but engage more in financial investing. Furthermore, savings behavior does not significantly differ between the two household groups. These insights highlight the need for policies promoting financial literacy to enable more productive use of remittances for Filipino households.