The Impact of Remittance Volatility on Financial Stability in the Republic of Moldova

Abstract

Remittances play a crucial role in maintaining the macroeconomic balance of the Republic of Moldova, constituting a major source of external financing. However, their volatility can impact financial stability. In this context, the study examines the relationship between remittance fluctuations and financial stability indicators, applying a corelation coeffcient to identify the dynamic links between the selected economic variables. The results suggest that an increase in remittance volatility may lead to higher financial instability by amplifying vulnerabilities in the financial system. To mitigate these risks, this study proposes stimulating economic growth through invetsment policies and enhancing financial sector resilience through regulatory measures. These measures can help stabilize the financial system and ensure the financial long-term stability. CZU: [336.717.131:331.556.4]:338(478); JEL: F24, E44, G21