Does globalization reduce remittance costs? Evidence on the role of peace from bilateral panel data

Background: Reducing remittance costs is a central objective of Sustainable Development Goal (SDG) 10.c and a priority under the G20 remittance agenda. Despite extensive empirical work, progress toward these targets remains uneven, partly due to the limited availability of bilateral data needed to examine corridor-level determinants of remittance costs. Purpose: This study investigates how bilateral remittance flows, globalization, and peace asymmetry jointly influence remittance costs across international corridors, addressing a key gap in the remittance cost literature. Methodology: The study constructs a balanced bilateral panel dataset for 2011–2025 by generating corridor-level remittance flows using interpolation combined with Iterative Proportional Fitting (IPF). Globalization is measured as the bilateral average of country-level globalization indices, while peace asymmetry is captured as the absolute difference in peace levels between sending and receiving countries. The analysis employs corridor fixed-effects panel regression with clustered and Driscoll–Kraay standard errors, complemented by instrumental variable estimation to address endogeneity. Findings: The results show that higher bilateral remittance flows significantly reduce remittance costs, confirming strong scale and competition effects. In contrast, globalization and peace asymmetry do not independently lower costs once corridor-specific heterogeneity is accounted for. Evidence of a moderating role of peace in the globalization–cost relationship is weak and specification-sensitive. Limitations: The analysis relies on interpolated bilateral remittance matrices and cannot capture informal remittance channels. Implications: Policies aimed at expanding formal remittance volumes and deepening corridor-level competition are likely to be more effective in reducing costs than macro-level institutional reforms alone. Novelty and Contribution: This study advances the literature by developing a bilateral corridor-level framework that integrates globalization and peace asymmetry into remittance cost analysis.