Remittance, financial inclusion and borrowing behaviour in Central Asia

This study examines the relationship between remittance receipt and formal and informal borrowing in Kazakhstan, the Kyrgyz Republic, Tajikistan, and Uzbekistan. Using individual-level data from the Global Findex 2021 database, we estimate country-specific logit models to assess whether remittance recipients are more likely to borrow from formal financial institutions and from family, relatives, or friends. The results show that remittance receipt is positively and significantly associated with both formal and informal borrowing across all four countries, although the magnitude of these associations varies substantially. The associations are stronger in Kazakhstan, the Kyrgyz Republic, and Tajikistan, while both are considerably weaker in Uzbekistan. Wage employment and digital payment use also emerge as important correlates of borrowing, particularly through formal financial channels. The findings provide stronger support for credit complementarity than for substitution and suggest that complementarity may operate simultaneously through formal financial institutions and informal social networks. Cross-country differences are consistent with the view that the relationship between remittances and borrowing is shaped by the accessibility and structure of domestic financial systems. The study contributes comparative evidence on remittances, borrowing channels, and financial inclusion in an understudied Central Asian context.