Can Government Incentive on Remittance Encourages Remitters in Bangladesh? A Policy Study

ABSTRACT: The government's recent two percent remittance incentive has attracted the attention of remitters and policymakers in Bangladesh. The purpose of this inward remittance incentive policy is to encourage remitters to send money in a legal manner. This will minimize illegal money transfers from overseas, and the government will be able to grow the reserve. The goal of this research is to investigate if the policy has had any recent impact on remitters and if there has been any change in money flow from overseas to Bangladesh through legal channels. We investigated using Bangladesh Bank remittance data and discovered a significant increase in the Bangladesh remittance flow in FY 2020-2021. In correlation matrix analysis using Pearson product correlation matrix this study has found Bangladesh's reserve and remittances are more closely linked than those of Bhutan, Pakistan, and Sri Lanka, following Nepal and India. However, the Pearson product correlation value for Pakistan and Sri Lanka was determined to be statistically insignificant.

Keywords: Remittance, Incentive, Policy, Bangladesh Bank, Correlation matrix