Afr Dev Rev. 2020;1–15. wileyonlinelibrary.com/journal/afdr | 1 DOI: 10.1111/1467-8268.12439 ORIGINAL ARTICLE The direct and indirect risk impacts on remittances: A cross‐regional specific effects Dorsaf Sridi 1 | Imene Guetat 2,3 1 Department of Economic Sciences, Private University of Sousse (UPS), Sousse, Tunisia 2 Department of Economic Sciences, Higher Institute of Accounting and Business Administration (ISCAE) of Tunis, Tunisia 3 Department of Economic Sciences, Economics Center of Paris Nord University‐France, CEPN – UMR 7234, France Correspondence Dorsaf Sridi, PhD, Department of Economic Sciences, Private University of Sousse (UPS), Sousse, Tunisia. Email: dorsafsridi@gmail.com Abstract The main purpose of this paper is to study determinants of workers’ re- mittances especially the impact of country risk based on a regional comparison of 121 countries subdivided into six areas over the period 1984–2015. We consider possible direct and indirect effects of different risk indexes. We par- ticularly focus on the comparison of the regional effect of economic, political, and financial risks on remittances. To capture these effects, region‐specific variables are introduced. The results show that remittances are more influ- enced by the risk indexes than other macroeconomic variables. Regional comparison indicates that remittance inflows are more sensitive to the dif- ferent risks in the MENA region compared to other world regions. The financial risk is highlighted to have the largest impact on remittances in this region. 1 | INTRODUCTION During the past decade, workers’ remittances were an important source of enrichment for developing countries, particularly in the Middle East and North Africa (MENA), with about 55 billion in 2017 (World Development Indicators [WDI], 2019). A great number of earlier studies have illustrated their importance for economic growth, poverty alleviation, and investment in receiving countries (Anyanwu & Erhijakpor, 2010; Baldé, 2011; Bayar, 2015; Fosu & Mold, 2008; Giuliano & Ruiz‐Arranz, 2009; Kumar, 2013; Onyeiwu, Polimeni, & Polimeni, 2008; Tahir, Khan, & Shah, 2015). Compared to other regions, remittances as a share of GDP are very important in MENA countries representing 3.9% in 2017 (Latin America & Caribbean 1.9%, South Asia 3.5%, sub‐Saharan Africa 2.6%, Europe & Central Asia 1.5%, and East Asia & Pacific 0.7%). Remittances have exceeded foreign direct investment (FDI) and official development assistance (ODA) in the MENA region (Figures 1–3). Many factors can affect the remittances evolution. These flows can be affected by economic environment, financial situations, and political conditions (Lartey, 2016). During the last crisis (2007–2010), remittances to the MENA region resisted well and tended to be a countercyclical source of foreign earnings exchange unlike the FDI, which decreased. So, migrants usually would send more money to their families left behind who are facing difficulties (Guetat & Sridi, 2017; Hor & Pheang, 2017). In fact, after 2001, remittances have increased in the MENA region compared to previous years. This increase can be attributed to the “Euro effect” and “September 11 attacks” (Hertlein & Vadean, 2006). On one hand, emigrants did not receive the new currency with a great confidence and on the other hand they wanted to ensure better security for their family in the home country by sending money. Recently remittance inflows were generally robust in the MENA countries, except Egypt, where remittances have declined owing to removals and ------------------------------------------------------------------------------------------------------------------------------------------- © 2020 The Authors. African Development Review © 2020 African Development Bank