  Remittances have become one of the driving forces of development for
countries all over the world, especially in lower-middle-income nations. This
paper empirically investigates the association between remittance flows and
financial development in 4 lower-middle-income countries of Latin America. By
using a panel data set from 1996 to 2019, the study revealed that remittances
and financial development are positively associated in these countries. The
study also discovered that foreign direct investment and inflation were
positively correlated with financial development while trade openness had a
negative association with financial development. Therefore, policymakers of
these countries should implement and formulate such policies so that migrant
workers would have the incentives to send money through formal channels, which
will augment the effect of remittances on the recipient country.
